IMPLICATION OF THE VAT INCREASE TO RESIDENTIAL PROPERTY SALES
Category General News
IMPLICATION OF THE VAT INCREASE TO RESIDENTIAL PROPERTY SALES
During the 2018 budget speech the former Minister of Finance announced an increase in the VAT rate to 15% effective from 1 April 2018.
The increase will affect specific goods and services differently depending not only the deemed ‘time of supply’ rules, but also the ‘transitional’ rules applicable to that specific good or service.
The specific time of supply rules applicable to all fixed property or any real right thereto is deemed as the earlier of registration of transfer in the Deeds Registry or date of payment increasing the VAT rate to 15% for transfers registering after 1 April 2018.
A concession is however made in respect of residential property transactions and the 14% rate will continue to apply in transactions where:
• the price of sale or construction was determined and stated in the agreement;
• which must have been concluded (signed) by the parties before 1 April 2018;
• with payment and registration taking place after 1 April 2018
The concession will apply to certain sales of residential property as a dwelling which includes the sale of: • freehold;
• sectional tile;
• share block
• plot and plan
• construction of a new dwelling
These concessions do not apply to commercial property transfers and a VAT rate of 15% will apply to transactions registering after 1 April 2018.
Author: STBB
