Faculty of Commerce, Law and Management (ETDs)

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Subject: search.filters.subject.Residential property

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    The VAT implications for residential property developers in relation to short term letting or temporary letting of a dwelling: a comparative study of South Africa, New Zealand, Australia and Estonia
    (University of the Witwatersrand, Johannesburg, 2022) Mandlakazi, Phiwokuhle; Rudd, Reinhard
    The purpose for which a property will be used is an essential element in establishing proper value- added tax (VAT) treatment. The VAT implications for property developers where the developer may have to temporarily let a dwelling or dwellings before finding a suitable buyer still remain unclear even after the promulgation of the new section 18D which came into effect on 1 April 2022. Property developers had to pay VAT on the open market value of the property which had been substantially higher than the VAT that was claimed on the costs incurred on the developmentof the properties. This had a negative cash flow effect on the property developers. The new section 8D is addressing the issues previously experienced when dealing with VAT on the letting of residential dwellings that were developed for sale. This section however, still leaves a lot of questions unanswered because o f its failure to address all possible transactions that may result from temporary leasing and the subsequent sale of residential dwellings. This study considers the challenges experienced or that may be experienced by property developers and the implications of the VAT regulations where residential property in a dwelling is concerned. The implications on property developers where dwellings are temporarily let to cover certain costs before f inding a suitable buyer are examined. The study will examine the VAT implication onproperty developers in relation to temporary letting of a dwelling in South Africa. The South African VAT implications will be compared to the VAT implications in New Zealand, Australia and Estonia
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    The effectiveness of trusts, including companies within a trust structure, as a tax saving mechanism in relation to investment property
    (2021) Naidoo, Shanolan
    This report analyses the tax benefits and disadvantages of utilising a trust as an investment vehicle for residential property investment versus purchasing these in one's individual capacity. It also assesses if the trust can be utilised as part of a wider structure involving companies to legitimately reduce the effective tax liability of the investor while still being able to extract value from the investment. The tax consequences of the various investment vehicles (natural person, trust, company) have been assessed in relation to an investment property portfolio. This assessment includes current tax, capital gains tax, estate duty, anti-avoidance (such as section &C), specific property related legislation (such as sections 13sex), as well as specific scenarios involved in property investment (such as the fact that these will typically generate losses during the initial years of investment). Based on analysis of the various types of taxes that has been performed, it is clear that there is no standard solution indicating that one investment vehicle is more suitable than the other. The most tax efficient vehicle is dependent on how much the individual earns in a tax year, whether the investment property portfolio is loss or profit making, the intention and business model involved (whether to hold for long term appreciation or to sell), the type of investment property being purchased (such as whether these would qualify for special allowances such as 13sex), the value of the portfolio involved, whether these would generate capital gains or losses upon sales, etc.