The general rule is that when a seller is not a registered VAT vendor, transfer duty is payable on the purchase price by the Purchaser. However, when the seller is a VAT vendor, then VAT is payable on the purchase price by the Seller. As a result, the end result for the client was that she "saved" R16 000,00 when she originally purchased the property by claiming back the transfer duty, but became liable for the payment of VAT of R135 000,00 when she sold the property.

The above case illustrates how careful people must be when structuring property transactions. The seller and the purchaser must make sure that they know whether VAT or transfer duty is going to be payable on the sale and must then make certain that the Deed of Sale sets out the correct position in this regard.

In my article which appeared in the Property Post on 3 April this year, I dealt in some detail with the tax which is payable on property transactions. Our website will soon be up and running and this previous article will be available on our website. I will publish our website details in a future article.

On the subject of tax implications, buyers of residential properties who are considering registering the property in the name of a legal entity (company, cc or trust) must also give careful consideration to the capital gains tax implications of doing this.

Care should be taken with the structuring of property transactions and the drafting of contracts relating thereto. Sellers and buyers often come to me after transfer has been registered or after the Deed of Sale has been signed with problems that have arisen due to badly structured transactions or poorly drafted contracts. At this stage it is often too late to do anything to assist and they simply have to live with the consequences.

My advice to sellers and buyers is to seek expert advice before signing the Deed of Sale.