Buying off-plan can mean a major saving in your transfer costs
EARLIER this year, transfer duty rates were again increased, mainly affecting the top end of the residential property market.
According to Mike Deacon, director of property developer Equity Estates Cape, buying a home off plan is now even more advantageous than buying an existing home.
“The developer, who is the seller, pays VAT at 14 percent and no transfer duty is payable by the buyer. The differences are huge. Transfer duty on a R6 million property would be R85 000 on the amount up to R2.25m plus 11 percent of the sale price over R2.25m, which is R412 500, making a total of R497 500. At sales over R10m the position is even worse, being R937 000 plus 13 percent of the value over R10m.
“In a normal property transaction you need to take transfer costs into account, possibly with quite a few renovation costs. On that basis the end cost of buying an existing home at a little over R8m, paying transfer duty and transfer costs and some fixing up, is about R9.5m.
“At New Court at Steenberg in Zwaanswyk Road, Tokai, a development in which we are currently involved, no transfer duty is payable.
“There is a 20 percent deposit payable, with the balance due on completion. The units are priced from R8.59m, and using the example of the percentages above, there is a total saving of R782 400.”
Deacon says construction of the 18 luxury units and other project infrastructure at New Court at Steenberg is on track for completion in November. More than half of the units are already at roof level, and 66 percent of the units have already been sold.
A new site office will be completed soon, providing visitors with plans, 3D unit renderings, audiovisual and other aids to enhance the visual experience and help to make buying decisions.
“Property has been one of the best performing asset classes this past year, with only rand hedges better.
“Markets have endured a rough ride domestically and globally, with particularly poor performances in most other sectors. However, residential property has outperformed other investments, and the demand for property in South Africa has exceeded supply,” says Deacon.
“The trend for buying property off-plan has also gained momentum.
“This is especially the case in security estates and cluster homes. Buying off- plan provides buyers with opportunities to maximise returns on their investments right up front.
“Another benefit is that some buyers want modern, innovative, secure and customisable homes. This is the logical alternative to the hassles associated with building a new house or renovating an existing one.”
Call contact Mike Deacon on 083 250 8542 or Shelagh Billett on 083 292 3794. e-mail mpd@ e quityestates. c o. z a or shelagh@ capepropertyshop.com.