People & News

Budget 2011

The exemption is set to increase from R500 000 to R600 000. To quote from the relevant extract of the Budget Tax Proposals:

Transfer duty
Government proposes to increase the transfer duty exemption threshold from R500 000 to R600 000. A rate of 3 per cent will be applicable to the value from R600 001 to R1 000 000; an amount of R12 000 plus 5 per cent to the value between R1.0 and R1.5 million; and an amount of R37 000 plus 8 per cent to amounts above R1.5 million. This revised rate structure will apply to properties acquired under purchase agreements concluded on or after 23 February 2011. It will also be applicable to legal persons (close corporations, companies and trusts).

The proposed transfer duty rates read as follows:

Property Value Rates of tax
R0 - R600 000 0%
R600 001 - R1 000 000 3% on the value above R600 000
R1 000 001 - R1 500 000 R12 000 plus 5% on the value
over R1 000 000
R1 500 001 and above
R37 000 plus 8% on the value
over R1 500 000

By way of comparison last year's rates were the following:

Property Value Rates of tax
R0 - R500 000 0%
R500 001 - R1 000 000 5% on the value above R500 000
R1 000 001 and above R25 000 plus 8% on the value over R1 000 000

It is of interest to note that these changes apply to legal persons as well, which up until now have been taxed at a flat rate of 8%. Therefore in the case of a transfer involving a juristic person for a property worth less than R600 000 the changes are generous especially since the 8% flat rate (of R48 000) has fallen away and is now zero. On a property worth R1 500 000 transfer duty of R120 000 is now only R37 500.

For more information and tables see The Budget and Property from ABSA, in which Jacques du Toit notes that the value of property exempted from transfer duty has risen from R100 000 in 2002/2003 to R600 000 for 2011/2012. Revenue from this source is budgeted at R6,1 billion in the current fiscal year.

The popular fully revised tables will be published by GhostDigest next week.

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