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These two Vat implications could turn your extra empty property into a way to save your company tax

by , 16 June 2014
You've made the investment and purchased new premises for your company. An extra smaller property came with this new premise. Now you're wondering what to do with it since you don't need it right now. Well have you considered using that extra property as a way to get some tax back?

That extra property could generate some cash back for you. If you use it in the right way, you can get in extra income and claim input tax back.

That's right! And today we're going to show you how you can do this.

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You can't claim input tax on residential rental property 

If you rent out your extra property commercially, you can claim some tax deductions on it. But did you know that in addition to these tax allowances you can claim input tax.
There aren't any Vat implications on a residential property. But if you rent out that property commercially, then there are two Vat implications you can take advantage of… 

Two Vat implications that could save you money

According to the Practical Vat Loose Leaf if you purchase a property with the intention to:
1. Rent it out as a commercial property to a close corporation or private company; or
2. Use it as a bed and breakfast or a guest house;
You can claim some of the Vat you paid on buying the property.
Now even if you didn't actually pay Vat when you bought the property, you can claim input tax on the transfer duty fees. You won't get anything more than the amount you initially paid as transfer duty fees though.
Just ensure the property is zoned correctly for commercial use or SARS won't accept the claim.
With this Vat tip up your sleeve, you can earn some money back and turn your new business premises into a real investment.
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