- Developers who build residential property for sale and temporarily let it can stay in the VAT system if the letting does not exceed 12 months, avoiding the usual exempt-supply change-in-use issues.
- The rules require an output tax adjustment when the property is temporarily let, with the possibility of reversal if the property is later sold or the letting remains within the permitted period.
- If the letting exceeds 12 months, or the developer permanently shifts from sale to rental, the VAT consequences are clarified under the amended framework.
- The latest amendments clarify how section 18D interacts with the input tax deduction under section 16(3)(o) when the property is sold or the temporary letting period exceeds 12 months.
- The amendments eliminate reliance on the section 72 dispensation previously contained in Binding General Ruling 64, creating a more complete statutory VAT regime.
Source: sars.gov.za
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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