Selling properties on the West Coast of South Africa
Reduced CGT a boost for home sellers

Home sellers can expect a tax boost, following the announcement in the 2009 Budget Speech that government will be raising the capital gains tax (CGT) exclusion on the sale of primary residences from R1.5 million to a gross value of R2 million.

In addition, Manuel has proposed a simpler calculation to reduce the compliance burden, basing the CGT calculation on the gross proceeds of the sale. This will enable the taxpayer to better understand how the exclusion applies on disposal, without resorting to complex capital gain calculations.

CGT is currently applicable on primary residences sold for more than R1.5m and is calculated as a percentage of the gain. For primary residences valued above the R2 million threshold the normal rules - including the current R1.5m capital gain or loss exclusion ???? will apply.

The property market will also be influenced by the annual exclusion ceiling for capital tax and losses that went up from R16 000 to R17 000 for individuals.

In spite of the proposed relief, it is advisable for sellers to always keep a record of the expenditure on their primary residences because they will still need to calculate the capital gain if they unexpectedly sell their home for more than R2 million.

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