Commercial Letting - VAT on Rent

VAT is charged on Rent where the unit rented out is a Commercial Property and where the owner entity of the Property is registered for VAT. In order to illustrate how the various scenarios are handled by rpmsOnline, we will discuss the different scenarios with reference to an example. rpmsOnline provides for any of the four scenarios described below.

Example: Your agency rents out a Commercial Shop for R 10 000 per month and the agreed monthly Rental Commission is 10% of the Monthly Rent. The following scenarios exists:

Scenario 1 - Agency and Landlord of the Commercial Unit is registered for VAT

  • Monthly Rent to Tenant = R 10 000 + R 1 400 (VAT) = R 11 400
  • Monthly Commission billed to the Landlord = R 1 000 + R 140 (VAT) = R 1 140
  • Rent due to Landlord = R 11 400 (VAT Included)
  • Amount due to Landlord after deductions = R 11 400 - R 1 140 = R 10 260

Scenario 2 - Agency is not registered for VAT, but the Landlord is registered for VAT

  • Monthly Rent to Tenant = R 10 000 + R 1 400 (VAT) = R 11 400
  • Monthly Commission billed to the Landlord = R 1 000
  • Rent due to Landlord = 11 400 (VAT Included)
  • Amount due to Landlord after deductions = R 11 400 - R 1 000 = R 10 400

Scenario 3 - Agency is registered for VAT, but the Landlord is not registered for VAT

  • Monthly Rent to Tenant = R 10 000
  • Monthly Commission billed to the Landlord = R 1 000 + R 140 (VAT) = R 1 140
  • Rent due to Landlord = R 10 000
  • Amount due to Landlord after deductions = R 10 000 - R  1 140 = R 8 860

Scenario 4 - Neither the Agency nor the Landlord is registered for VAT

  • Monthly Rent to Tenant = R 10 000
  • Monthly Commission billed to the Landlord = R 1 000
  • Rent due to Landlord = R 10 000
  • Amount due to Landlord after deductions = R 10 000 - R  1 000 = R 9 000

How to setup the Agency for VAT registration

  1. Navigate to the Management menu
  2. Select the Company Settings and Defaults menu option
  3. On the Company Details tab of the form, fill in the Company VAT Number and tick the VAT registration flag (see example below)
  4. Click on the Save button to save the form.

How to setup the Landlord for VAT registration

For the Landlord:

  1. Navigate to the Admin and Contacts Menu
  2. Select the Landlords menu option
  3. Search for the Landlord and click on the Edit icon to open the Landlord details form
  4. Fill in the Landlord VAT Number and Save the form

For each Property of the Landlord:

  1. Search for the Property on the Property Dashboard
  2. Open the Property form from the Go To Options drop down menu
  3. Select Commercial from the Property Type drop down field and Save the form

If the Landlord is setup for VAT Billing on Commercial Rent, the Charge VAT on Rent flag will be ticked on the Property Description and Other info panel on the Property form.

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