All property transactions will either be subject to the payment of either VAT or transfer duty. Whether VAT or transfer duty applies depends on the seller’s VAT registration status and the intended use of the property by the buyer. In the context of a property transfer, VAT is paid by the seller to SARS upon registration. The rate of VAT is typically 15%, but some transactions may qualify for a 0% rate.


If a seller is registered for VAT and the property forms part of their VAT-registered business, VAT will be applicable. On the other hand, if the property is not part of their business, transfer duty will be payable.

It is of the utmost importance to indicate whether the purchase price includes or excludes VAT to prevent later disputes between the parties.


Zero-rated transactions are specific situations where VAT is applicable but levied at a 0% rate. These transactions usually involve both the buyer and seller being VAT-registered, and the sale is considered a going concern.
In order to qualify as a zero-rated transaction the sales agreement must include the following terms:

  • Confirmation that both parties are registered for VAT on the date that the agreement is signed;
  • The purchase price includes VAT at a zero-rate;
  • That the property is sold as a going concern; and
  • That the property is sold with an income-generating activity, which must continue in the hands of the purchaser after registration.

Contact our offices for expert advice on transactions which may be subject to the payment of VAT before concluding the agreement of sale.