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The value-added tax implications of the temporary change in use adjustments by residential property developers: an international comparative study
Southern African Business Review
View Archive Info| Field | Value | |
| Title |
The value-added tax implications of the temporary change in use adjustments by residential property developers: an international comparative study
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| Creator |
du Preez, H
Klein, AE |
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| Subject |
value-added tax, residential property, change in use, temporary letting
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| Description |
Residential property developers sometimes struggle to dispose of newly built residential premises, because of an oversupply of residential property in the market and decreased sales in recent years. Many developers have switched from speculation (when residential properties are built to be sold) to investment (when properties are retained to generate rental income). Some developers only lease out newly constructed dwellings temporarily in anticipation of selling them later at a more favourable price. Units may be held with the ultimate goal of selling them, creating taxable supplies. In South Africa, these changes in the use of residential property have value-added tax (VAT) consequences that result in a negative cash fl ow. In the 2010 Budget Speech, amendments to the harsh VAT legislation were proposed. This study examined the South African VAT legislation applicable to property developers during the period when residential properties are let out. The fi ndings suggest that the current South African VAT legislation relevant to changes in the use of residential properties is harsher than that in New Zealand or Australia, but that the proposed amendments offer some degree of relief. However, even with these amendments, there is insuffi cient relief, and another possible solution is proposed.Key words: value-added tax, residential property, change in use, temporary letting
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| Publisher |
College of Economic and Management Sciences (UNISA)
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| Contributor |
—
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| Date |
2015-01-15
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
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| Format |
application/pdf
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| Identifier |
http://www.ajol.info/index.php/sabr/article/view/111364
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| Source |
Southern African Business Review; Vol 18, No 3 (2014); 46-65
1998-8125 1561-896X |
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| Language |
eng
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| Relation |
http://www.ajol.info/index.php/sabr/article/view/111364/101142
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| Rights |
Copyright to the journal content belongs to the College of Economic and Management Sciences
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