There is still some relief with regards to CGT on property Transactions for sellers of primary residences.
The bottom line is:
- CGT is calculated on the net profit realized.
- Primary residences sold from 01ST March 2012 where the profit does not exceed a value of R 2 million, will be exempt from CGT, as apposed to the previous R 1,5 million rebate.
- An average rate of CGT on an Individual is now 13,3% up from previous average rate of 10%.
- There is no rebate afforded to Companies and Trusts, properties sold in these instance will attract CGT on the first rand net profit realised.
- An average rate of CGT on Companies is now 18.6% up from previous average rate of 14%.
- And an average rate of CGT on Trusts is now 26.7% up from previous average rate of 20%.
- CGT tax is triggered on the date the agreement is signed, it only be- comes payable when the income tax return is submitted at the end of the financial year during which the property was sold.
- A number of deductions can be made against the gross profit, namely;
- Renovations that were done and which will qualify as an im- provement to the property;
- Estate agent’s commissions (and the VAT)
- Other professional fees such as architects, draughts men, electrical compliance certificates and beetle inspections.
- Costs for routine maintenance, such as painting the property cannot be deducted.
- The tax amnesty period for properties to be transferred out of entities and into individual names is still available until the 31st of December this year.
- Owners are advised to take advantage of the amnesty benefit before it ex- pires, because there is no certainty whether any further amnesty benefit will follow or be allowed after 31st December 2012.