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I own a commercial property that is registered for vat , I receive the rent plus vat from the tenant and pay it to Sars and claim the small amount of vat I have paid on the council rates account every month.I have now sold the property and paid R56,000 vat to the selling agent Can I reclaim this vat from Sars . Thanks Frad,
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A person is registered for VAT because it carries on activities continuously or regularly in the course or furtherance of which it supplies goods or services to another person for a consideration. In your case, it would seem like you were supplying the right of use to your property and that same was not occupied by the tenant as a place of residence. Based on this understanding, you would have been entitled to claim the VAT or transfer duty (as input tax) when you acquired the property and as you mentioned, you accounted for 14% VAT on the rentals and other charges to the tenant.
The sale of the property should therefore also be subject to 14% VAT, unless a zero-rated supply of a going concern was made or a change in use occurred prior to the property being sold (in which case the supply of the property would have been exempt from VAT and transfer duty was likely due). Please confirm whether the sale was subject to VAT and if so, the applicable rate (i.e. 14% or 0%)?
As mentioned, a person is registered for VAT (and not a building). In order to adequately respond to your query, it needs to be established whether the person (e.g. a natural person, company, CC, partnership, etc.) incurred the VAT on the agent services wholly (or partly) for purposes of making taxable supplies. Where this is the case, the R56k (or a portion thereof) can be claimed from SARS as input tax.
The first proviso to the definition of "enterprise" as defined in section 1(1) of the VAT Act, provides amongst other things, that anything done in connection with the commencement or termination of an enterprise is deemed to be done in the course or furtherance of that enterprise. It follows that even if for instance, a person is registered for VAT purely because of the rentals charged in respect of a single property and once that property is sold, that person will not make any further taxable supplies and is therefore required to deregister for VAT, that person will still be entitled to claim the VAT on the agency services, since same was incurred in order to terminate the enterprise.
In most instances, property rates constitute a "municipal rate" as defined in section 1(1) of the VAT Act and this supply is subject to VAT at the zero-rate in terms of section 11(2)(w) of the VAT Act. It follows that the VAT you paid and claimed on council rates, is either not VAT that was charged on a "municipal rate", or council incorrectly charged 14% VAT in this regard. -
Thanks Bammer , you are teaching me , 1= the sale was vat rated at 0 % as the buyer was also vat registered , the agent who sold it for me was also vat registered and charged me the R56,000 vat on the sale price .2 = Sorry the vat I claimed was for water, sewerage only of the council rates account . Once again .Thanks FradComment
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