[Question] VAT on second hand property from a non vendor

[willie69]

I have always believed that the VAT that you can claim as an input tax deduction on fixed property from a non vendor was limited to the amount of transfer duty paid.

I have however came across these 2 articles stipulating that this is no longer the case due to an amendment.

http://www.vvd.co.za/index.php?view=items&cid=14%3Acommercial-law&id=271%3Ayou-can-now-claim-back-14-and-not-just-the-transfer-duty&option=com_quickfaq&Itemid=118

and perhaps more relevant

http://www.property24.com/articles/vat-and-buying-property-from-non-vendors/16690

Has anyone actually experienced this in person and have successfully claimed the full tac fraction (14/114) on the purchase price and not just the transfer duty? If so under what heading in the return was it claimed and what supporting documents was provided to SARS in support of the input claim.

This could be quite relevant to me as I have a farming business registered for VAT and have bought to plots of land under the transfer duty threshold. In the "old Act" I would be limited to the transfer duty I paid in this case ZERO but with this amendment I could claim quite a substantial amount.

Thanks

[CLIVE-TRIANGLE]

Hi Willie, the property24 article is correct. You would in the circumstances you describe, show it under Capital Goods.

There are other aspects that apply to fixed property purchases and you would do well to have the necessary docs ready, because it is 99% certain that the submission will be "reviewed".

Firstly, payment must have been made, because transfer must already registered. They will not refund prior to that.
Secondly, you must be able to show that vatable supplies will be made from the property, even if at zero rate.

[willie69]

Hi Willie, the property24 article is correct. You would in the circumstances you describe, show it under Capital Goods.

There are other aspects that apply to fixed property purchases and you would do well to have the necessary docs ready, because it is 99% certain that the submission will be "reviewed".

Firstly, payment must have been made, because transfer must already registered. They will not refund prior to that.
Secondly, you must be able to show that vatable supplies will be made from the property, even if at zero rate.

Thanks Clive that is good news indeed!

When you refer to "necessary docs" I presume this refers to the transfer duty exemption, what else might be required? Does one need to complete a VAT 264 for the purchase of second hand goods as well?

[CLIVE-TRIANGLE]

When you refer to "necessary docs" I presume this refers to the transfer duty exemption, what else might be required? Does one need to complete a VAT 264 for the purchase of second hand goods as well?

I did not complete the VAT 264, but it won't hurt.

Documents I had to provide to prove the claim:
- Deed of sale / invoice
- All correspondence from transferring attorney, especially his final notice that transfer had been affected.
- Proof of any duties paid. In that case there was (I have no idea what use this was, given the amendment)

Regarding rendering taxable supplies
In this case the client was a commercial property owning company with vatable rental income. A letter from the accountants stating same, the most recent AFS and the previous two VAT 201's (as if they don't have them) showing that vatable supplies were made.

Nevertheless, the claim was lodged 29/11/2012 and only finalised on 09/05/2013!

[willie69]

Thank Clive - will try and get as much information together before I submit the return.

Will keep you posted on our turnaround time, hopefully less than your 6month struggle.