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Tax Incentives
Investors still have access to powerful tax incentives, the popular Section 13sex of the Income Tax Act No 58 of 1962.
This scheme enables any taxpayer who owns five or more new, residential rental units, to claim up to 55% of the purchase price as a tax deduction. (Deductible over 20 years)
Section 13sex
How it works
- Five units at R2,925,000 each
- = R14,625,000
- Discount — R750,000 (R150,000 each)
- Final Purchase Price
- = R13,875,000
- Deemed Purchase Price = 55% of Final Purchase Price
- = R7,631,250
- 5% of the deemed price may be used as a tax deduction (residential building allowance)
- This works out to a tax deduction of
- R381,562.50
- Total tax write-off (taxable income)
- = R7,631,250
Terms & Conditions
Taxpayer Criteria:
The taxpayer must own at least 5 residential units. A residential unit refers to a building or self-contained apartment, mainly used for residential accommodation with the exclusion of structures used for business purposes, for example, hotels.
All units must be situated in South Africa. Residential units must be new and unused. (For example, buyers of flats that had previously been occupied would not qualify for this incentive.)
The units must be used solely for the purpose of trade (i.e. residential letting). This prevents housing claims for personal use.
*Disclaimer
In order to claim the tax allowance and/or incentive and/or deduction, certain requirements have to be met. The listed examples may not apply in certain instances. The Developer, its representative and/or its agents do not provide tax advice. All material in respect of the Development has been prepared for information purposes only, and is not intended to provide, and should not be relied on for, tax advice. Before concluding any transaction with the intention of making use of either of these tax incentives, the Developer specifically advises that a purchaser should consult his/her/its own tax adviser. The Developer cannot be held liable for any loss, however arising. Furthermore, the availability of these tax structures to any purchaser is not a warranty, express, tacit, implied, or otherwise, from the Developer in relation to the transaction.