VAT liability on sale of land and buildings
1.
Subsection 5(7) of the Value Added Tax Act. No
14 of 2002 gives how to calculate value of supply in sale of land and
buildings:
a.
It will be value of sale of land and buildings –
less
b.
Value of land and buildings constructed before
31.03.1998 at the time of supply (if sold at market value, the part sale value
of this).
2.
The alternative interpretation is when selling a
property; value of supply of the sale of property is limited only to the sale
value of the buildings constructed after 31.03.1998. This is logical according
to VAT principals, since being a VAT registered person VAT input credit could
have been claimed for the construction cost of the building. And the value addition
at the time of sale is; VAT on Sale
price less input credit claimed. This part of tax is due to the government.
Since the input credit has already claimed in the past at the time of
construction, VAT is payable on the sale price of the buildings constructed
after 31.03.1998.
