Have a Tax Question? Ask a Tax Expert
HelloA sale by a Vendor to a Vendor of a building comprising primarily residential units but including commercial units. VAT must be added to the purchase price but the purchaser will be entitled to claim an input tax credit limited to the fraction which the square meterage of the commercial units bears to the total square meterage. (It may be possible to persuadeRevenue to accept the apportionment on a rental basis.)
So do I have to pay vat on the full purchase price? Remember I am not registered for VAT, so i can not claim any vat.
The full price unless you would wwnat to ask SARs to apportion by the % of business units.If you continue the business you will need to register. The seller would add the VAT to the purchase price and the amount you pay would be increased. The seller would remit the VAT
Can I register my Trust for VAT and ask for a zero rate transaction?
You will need to register because of the on going business of the letting but you would not be allowed to ask for zero rate unfortunately. You could ask for the prorate of the units in relation to the rental of the units.
I am not even willing to guarantee that SARs would accept but it is not unrealistic to request.
what is the prorate in relation with the rental? I do not understand
The commercial units would allow for a credit so you could ask that SARs allows for the VAT only on the residential units at the sale.
As the Trust is not registered it could not get the credit so not paying on the commercial portions at sale would be you assist.
Talk it over with your legal and the seller.
Thank you very much. It helps. Than unfortunately I will not be able to buy this specific property. The VAT will be more than R550k
You are most welcome
Your positive rating is always thanks enough.