Since 10 January 2012 developers have enjoyed the relief provisions of section 18B of the Value-Added Tax Act which allowed them to temporarily let residential property, which they continue to hold as stock in trade, without the deemed ‘change in use’ provisions applying.
From 1 January 2015, section 18B will lapse, meaning that developers will no longer be allowed to temporarily rent out residential property without suffering the consequences of the deemed change in use adjustments occasioned by section 18(1). This means that they will, from the date of the change in use, be liable to SARS for the output VAT on the market value of the property, as the property will be deemed to have been supplied by way of a taxable supply, if it is for example let for residential purposes.
For more information, contact your STBB conveyancer.