Estate agents have welcomed the increase in the threshold for exemptions from transfer duties on properties to R900,000 (from R750,000), saying the move would provide some relief for first-time home buyers. This is despite the upward adjustment by Finance Minister Pravin Gordhan set to cost the fiscus R448m in foregone taxes.
CEO of Jawitz Properties, Herschel Jawitz, said, “The increase in the threshold below which transfer duty is not payable by 20% from R750,000 to R900,000 is an exciting move by Treasury to encourage This material has been copied under a DALRO licence and is not for resale or retransmission home ownership especially for first-time buyers. The 20% increase is way above the growth in property prices and will provide transfer duty relief of up to R4,500 for buyers at the R900,000 level.”
Jawitz added that at this level of the market, R4,500 is a meaningful amount which will pay towards other transaction costs. “Very often, first-time buyers qualify from an affordability point of view but don’t have enough for the transaction fees or deposit to buy a property. This will make a difference.” Andrew Golding, CEO of the Pam Golding property group said, “This aspirant sector of the market is a key driver of SA’s residential property market, solidly underpinning activity, particularly in metropolitan hubs, which increasingly draws a younger generation of home buyers wanting accommodation close to the workplace.” Golding also welcomed “the increased investment in infrastructure and transport networks, as well as in integrated urban development projects and township precincts”, saying this helps provide a catalyst for growth in the housing market.
Jawitz said, as expected, that Gordhan announced no further changes in the higher thresholds or transfer duty percentages and no change to the R2m exemption on capital gains tax for a primary residence. However, the maximum rate of capital gains tax for individuals and other trusts has increased to 18% and 36% respectively. According to Jawitz, this is in line with a trend from Treasury to discourage ownership of property and other assets in a trust. “The overall budget was, as expected, with very little income tax relief and a higher tax burden for high income earners with the introduction of a new marginal tax rate of 45% above R1.5m and a significant increase in dividend withholding tax by 33% to 20%.