Home is where the sav­ing is

Buy­ers of prop­er­ties cost­ing up to R900,000 will ben­e­fit most, but even the well-heeled will see a small sav­ing

Financial Mail - Investors Monthly - - Budget 2017 - Joan Muller [email protected]

From March 1, home buy­ers won’t pay a cent in trans­fer du­ties when they ac­quire a prop­erty priced up to R900,000, up from the pre­vi­ous ex­emp­tion thresh­old of R750,000.

At present, trans­fer duty of 3% on the prop­erty value be­tween R750,000 and R900,000 ap­plies. In other words, if you bought a R900,000 house a month ago, your trans­fer duty li­a­bil­ity would have been R4,500.

The un­ex­pected ad­just­ment in the trans­fer duty thresh­old will no doubt pro­vide wel­come re­lief to first­time and mid­dle-in­come home buy­ers.

It is also in line with the over­all fo­cus of this year’s bud­get, which is largely sup­port­ive of poor and work­ing­class fam­i­lies.

Though buy­ers in the sub-R900,000 bracket will be the big­gest win­ners from this year’s trans­fer duty ad­just­ments, peo­ple who buy homes for R1.25m and more will also make a sav­ing, al­beit a mar­ginal one.

Ef­fec­tively, from March 1 all home buy­ers will save R4,500 in trans­fer du­ties, ir­re­spec­tive of whether they have paid R1,5m or R15m for their abode.

Fi­nance min­is­ter Pravin Gord­han ex­pects the changes to the trans­fer duty rates to lead to a drop in rev­enue of R448m in 2017/2018, bring­ing gov­ern­ment’s es­ti­mated col­lec­tion from trans­fer duty to R8.42bn.

That’s an in­crease of less than 3% on the R8.25bn earned in 2016/2017.

How­ever, gov­ern­ment raked in R250m more than it ex­pected in trans­fer duty rev­enue in 2016/2017, no doubt on the back of last year’s size­able hike in trans­fer du­ties on lux­ury homes priced above R10m. Gord­han last year raised the trans­fer duty rate on such homes from 11% to 13% plus R937,500.

That meant a well-heeled buyer who spent R15m on a lux­ury abode in­curred a hefty R100,000 more in trans­fer du­ties than a year ear­lier.

More­over, last year was the sec­ond year run­ning that up­per-in­come home buy­ers were hit by trans­fer duty hikes.

In the 2015 bud­get, the trans­fer duty on prop­er­ties priced at more than R2.25m was raised to 11% of the value, plus R85,000 — up sharply from the pre­vi­ous limit of 8% on houses valued at more than R1.5m.

Es­tate agents have wel­comed this year’s trans­fer duty changes.

“The rais­ing of the ex­emp­tion thresh­old to R900,000 will cer­tainly en­able more first-time home buy­ers to get onto the prop­erty lad­der,” says Se­eff Prop­erty group chair­man Sa­muel Se­eff.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.