If you're not sure of whether or not you're allowed to claim input tax on retirement home property, don't fret. The Practical Vat Loose Leaf Service has an explanation for you…
Here's what the law says about claiming input tax on retirement home property
You can claim input tax where you buy business property: If you buy a business property from which you'll establish your retirement home, the seller will charge you Vat.
Once the property is registered in your name and you've paid the seller the full selling price (even if you raised a bond with a bank), you can claim the Vat as input tax.
You can't claim input tax where you buy the business as a going concern: If, however, you decide to buy an operating retirement home from someone who is a Vat vendor, it will constitute the sale of a going concern at the zero rate of Vat and you won't be able to claim input tax.
What if you buy a retirement home from someone who isn't a Vat vendor?
If you buy a retirement home from someone who isn't a Vat vendor, you'll pay transfer duty on the fixed property. You can, however, claim this back as input tax if your retirement home qualifies as a provider of commercial accommodation.
What if you convert part of your house into a retirement home?
You're entitled to a 'change of use' input tax claim on the fixed property and movable assets (for example, furniture) to be used for the retirement home.
Now that you know what the law says about claiming input tax on retirement home property, make sure you comply so you can avoid getting on the wrong side of SARS.
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