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VAT on Property Sales: Buyers and Sellers Information

VAT is a tax applied to the cost of the supply of goods and services by somebody who is registered as a VAT vendor. In a purchase agreement, it’s important to clarify upfront whether the purchase price of a residential property includes VAT and whether VAT or transfer duty is payable on a property transaction.


A guide to VAT on property sales

If the seller is registered for VAT purposes, the purchase price will include VAT, which is payable to SARS on transfer by the seller. If the seller is not registered for VAT purposes, then transfer duty is payable by the buyer.


Can the sale of a property incur both VAT and transfer duty?

No, it can only be one or the other, with the deciding factor being whether or not the seller is registered for VAT. However, the difference between them can be significant.


What is transfer duty?

Transfer duty is the tax payable by the buyer on a property purchased, unless the seller is a Vat vendor, in which case VAT is payable by the seller. Transfer duty is not applicable on the first R1 000 000.

Transfer duty is calculated on a sliding scale for property acquired on or after 1 March 2020 – check SARS website for the tax table.


How does VAT affect agent’s commission?

The seller must inform the real estate agent if they are a registered VAT vendor as their commission must be calculated on the net purchase price and not the gross purchase price.

A buyer must ascertain whether or not the seller is a VAT vendor. If they are, the property purchase price must include VAT. VAT is always claimable, but it still has to be paid over to the Receiver of Revenue first.


What if the buyer is a VAT vendor?

When VAT is applicable and the buyer is a registered VAT vendor, the buyer may claim the VAT that forms part of the purchase price as VAT input from SARS in their next VAT return. The contract must state the purchase price plus VAT. That wording is very important.



The buyer can pay either transfer duty or a purchase price inclusive of the VAT amount. It is always important to know what you’re liable for and budget accordingly.

If you would like to know more about the VAT implications of purchase or sale transactions, please contact us: GervaseM@alertsprofessionalservices.co.za