Wed 19, 04, 2006

Transfer duties no longer apply to houses costing less than R500 000

The 5% transfer duty will apply between R500 000 and R1m, while 8% is the rate above R1m. The flat 10% rate for companies and trusts is reduced to 8%. The consequence for the second hand property market [which incidentally continues to prosper despite word to the contrary] is obvious and buyers will be enjoying considerable savings. By way of example the table below sets out savings to be achieved as a result of the change:

PURCHASE PRICE NOW AFTER SAVING

R450000.00 R16600.00 RNIL R16600.00

R550000.00 R24600.00 R2500.00 R22100.00

R650000.00 R32600.00 R7500.00 R25100.00

R750000.00 R40600.00 R12500.00 R28100.00

R850000.00 R48600.00 R17500.00 R31100.00

R950000.00 R56600.00 R22500.00 R34100.00

R1050000.00 R64600.00 R29000.00 R35600.00

Capital Gains Tax has also received some positive attention and the primary residence Capital Gains Tax exemption figure which was previously set at R1million is now raised to R1.5million. The first R1.5 million therefore of capital gain made by a property owner on the sale of his primary residence is therefore now exempt from Capital Gains Tax which effectively amounts to a saving of approximately R50 000.00.