As a point of departure, let us assume that transfer duty is not applicable to this transaction. Instead, the purchaser is liable to pay VAT on the purchase price.

On 22 February 2018, the Minister of Finance announced that the VAT was to increase from 14% to 15% as from 01 April 2018. From now on, vendors and consumers will be responsible to pay an extra 1% on VAT, including, in some instances, on immovable property.

In terms of the Value Added Tax Act 89 of 1991 (as amended), VAT becomes applicable upon the supply of goods or services. Accordingly, when it comes to immovable property transactions, the time of supply is either the date of registration of transfer of the property into the name of the purchaser, or the date that payment of the purchase price is tendered to the seller (either by way of cash or guarantee), whichever occurs first. The applicable VAT rate on the transaction would then be the rate of VAT applicable at the time of supply.
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