ROOM FOR FUR­THER RE­LIEF

Finweek English Edition - - Openers - JOAN MULLER

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).

RE­CEIVER CASH­ING IN ON PROP­ERTY BOOM

Source: Trea­sury

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