What do you think about the VAT increase? Most of us have had some heated opinions to share at some point or other, because that 1% increase makes a huge impact across all of our expenses. At JNK Properties we have always concerned ourselves with our customers’ needs first though, so before the 1st of April hits we want to help you prepare for how this increase will affect your property transactions.
Which transactions will stay at 14%?
You may have a transaction in the pipeline already, and you are worried about how this increase may affect your budgeting and plans. What if your purchase was already at your limit?
If you had already determined and stated the price of sale or construction in an Agreement of Sale, signed by all relevant parties (the effective date) before the 1st of April 2018, then you shouldn’t have anything to worry about! Section 67A(4) of the Vat Act applies in this case and makes provision for you to still only pay 14% VAT on such transactions. Even if the registration of transfer only takes place after the 1st of April 2018.
Even if your agreement may be subject to a suspensive condition at any point and can only be fulfilled after this date, so long as you meet the above conditions you will still only pay a VAT rate of 14%.
The best advice for you
While most property developers and retailers might advise you to just wait right now and see how the market goes, at JNK properties we would like to advise you to make use of the short window of opportunity to save some money. You are investing in a home, a long term place of refuge. How much longer will you have to save up if you wait?
While the cost of a (hypothetical) R10 loaf of bread will go up from R11,40 to R11,50, the price increase on a property will go up by much more.
Buying a house that costs 500,000, taking out a loan for that full amount to be repaid over 20 years at 10.25% interest, will result in a monthly repayment cost of roughly 5000 rand. Included in the costs you need to pay will be things like bond registration and property transfer, all VAT inclusive costs. With the 1% increase in VAT all of these amounts will go up, and you are looking at a few extra thousands of rands that you could have avoided.
And if you want to build you dream home, the costs of all the materials will go up individually and the entire price will need to be reworked in many cases as well.
We’ve been constructing dream homes, fulfilling customers’ lifelong dreams, since 2007. We will keep doing this, and why not do it at the best price possible while you can still pay less for the same great quality?