While South Africa's listed property sector might have declined by just over 5% for the week that ended on 21 June, you still have to play by the rules and pay your Vat requirements.
After all, if there's one thing SARS doesn't tolerate its ignorance of the law. You will be punished severely with hefty penalties if you miscalculate Vat on accommodation.
Here's what to do to ensure this doesn't happen to you.
Here's how you can apply Vat rules for accommodation
Vat rule#1: Rental of a dwelling is exempt from Vat
If you rent out a property for residential accommodation such as flats, apartments and houses, the rental you receive is exempt from Vat.
Remember, residential rental income is a completely exempt supply. If you earn money from renting out property for residential accommodation, don't register for Vat, irrespective of your income.
Vat rule#2: The commercial side of mixed-use buildings attracts Vat
Sometimes a building comprises commercial and residential units. For example, a six storey building consists of shops and offices on the first two floors and flats on the remaining four floors.
This means, where the rental income for the commercial section exceeds the R1 million threshold, you'll have to register for Vat and charge Vat on the rental for that section only. The commercial section is where the shops and offices are located.
'Your input tax deduction will be limited to the expenses for the commercial section. Should you have expenses relating to the whole building, you'll only be entitled to claim a portion of the input tax,' says the Loose Leaf.
Here are the general rules on exactly what input tax can be claimed for the different kinds of supply
Well there you have it. The vat rules that apply to accommodation, ensure you apply them correctly to avoid fines.