ROOM FOR FURTHER RELIEF
THOUGH not entirely unexpected, Finance Minister Trevor Manuel’s decision not to give homebuyers further transfer duty relief is disappointing.
There is plenty of room for further transfer duty concessions, considering that the Treasury has in recent years reaped rich rewards from the residential property boom.
It’s true that last year’s big jump in the exemption threshold from R190 000 to R500 000 saw Government’s income from transfer duty drop year-on-year by 14% from R8,2bn in 2005 to R7,1bn last year. However, it seems that revenue from property sales for the 2006/2007 tax year is likely to exceed Manuel’s forecast. The Minister last year said that he expected an income of R6,2bn from transfer duties in 2006/2007 (1 March 2006 to 28 February 2007). Income from transfer duties in the first 10 months of the tax year is already at R5,8bn.
Anton de Leeuw, MD of property investment company YDL, says SA transaction costs are still high compared to international norms.
He points out that SA homebuyers are paying a maximum rate of R25 000 plus 8% on properties priced at more than R1m. In contrast, the maximum UK transfer duty is half of that – 4% for properties priced over £500 000 (R6,9m).