A recent report in the South African Business Day is urging domestic homeowners to make sure they have their homes valued before September 30 when a new form of capital gains tax assessment is introduced which could mean higher tax bills on future home sales.
Beyond this date, the base cost of a property can no longer be derived from market value for purposes of establishing capital gains tax. Instead, two new methods are being introduced, both of which are likely to result in higher tax being paid, and these are a time apportionment method or a 20% apportionment method.
As capital gains tax is calculated on the difference between the cost price and the selling price of a property, it would appear a sensible bet to determine base cost now whilst house prices reach record levels, with the likelihood that savings can be made if selling in the future.
The law stipulates that capital gains tax is not imposed on the first 1 million rand from the sale of a primary residence that is registered in the name of a naturalised individual.
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