If the seller of immovable property is a developer and a registered VAT vendor (or in the business of buying and selling property and is registered for VAT), then VAT is charged on (and included in) the purchase price of the property and Transfer Duty is not payable.

If the seller is not registered, Transfer Duty is payable on the purchase price, and not VAT. Transfer Duty is not included in the purchase price. If the buyer is registered, the VAT paid on the transaction to another vendor can be claimed back from SARS (or the amount of the Transfer Duty if purchased from a non-VAT vendor). Most properties transferred from one natural person to another natural person will incur transfer duty.

There are instances where Transfer Duty is paid by the buyer instead of VAT, when buying a property registered in the name of a company or cc, which is a registered VAT vendor.

The only instances where this will occur, is if the company or cc (“the company”) selling the property is not using this property to further the day-to-day business of the company, (Example: The company is in the business of producing a certain consumer good or service, but this said property had nothing to do with producing these goods/services, it was merely owned by the company and rented out to residential tenants).

In this case, if the company sells the property, it will be subject to Transfer Duty being paid on the purchase price. If the company is in the business of providing, for example:

  • Guest-house accommodation and the property was a tool in providing this service; or
  • The company is in the business of developing residential property;

And the company is a VAT vendor, and then the sale of the property would be subject to VAT being added to the sale price.