implications for the real estate sector
(MF LEGAL)
The 2012 budget speech, delivered by Pravin Gordhan on 22 February, has left some relieved and others a bit disappointed. Some are feeling like they will be stretched while the small business sector will be feeling relieved by the reduction in certain taxes. Capital gains tax is one of the taxes that effects the property industry where individuals, or entities, dispose of property registered in a Close Corporation/Company or is over a certain threshold.
Previously this rate of interest for an individual was 10% but from March 2012 it will increase by 3.32%. Companies will also see and increase to 18.65% from the previous 14%. Essentially, what this means is that when individuals and companies dispose of assets they will be liable to pay capital gains tax.
In other areas, the rebate on a primary residence has been increased from R1,5m to R2m. When an individual sells their primary residence, they will pay capital gains tax on the amount over and above the R2m rebate. A primary residence is any residence where the seller ordinarily resides, which he uses for domestic purposes. These provisions would generally apply to those possessing properties that have accumulated vastly in value since they were bought. However, looking at the current property market a large number of property owners will find themselves exempt from this tax.
If you need help or advice on taxation or financial planning within the real estate sector, contact us at Rivigan Property Group for more information.
The 2012 budget speech, delivered by Pravin Gordhan on 22 February, has left some relieved and others a bit disappointed. Some are feeling like they will be stretched while the small business sector will be feeling relieved by the reduction in certain taxes. Capital gains tax is one of the taxes that effects the property industry where individuals, or entities, dispose of property registered in a Close Corporation/Company or is over a certain threshold.
Previously this rate of interest for an individual was 10% but from March 2012 it will increase by 3.32%. Companies will also see and increase to 18.65% from the previous 14%. Essentially, what this means is that when individuals and companies dispose of assets they will be liable to pay capital gains tax.
In other areas, the rebate on a primary residence has been increased from R1,5m to R2m. When an individual sells their primary residence, they will pay capital gains tax on the amount over and above the R2m rebate. A primary residence is any residence where the seller ordinarily resides, which he uses for domestic purposes. These provisions would generally apply to those possessing properties that have accumulated vastly in value since they were bought. However, looking at the current property market a large number of property owners will find themselves exempt from this tax.
If you need help or advice on taxation or financial planning within the real estate sector, contact us at Rivigan Property Group for more information.
