Buy­ing off-plan can mean a ma­jor sav­ing in your trans­fer costs

Weekend Argus (Saturday Edition) - - PROPERTY -

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@ cape­prop­er­

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