The Revenue Laws Amendment Bill 80 of 2008 proposes that the provocatively named s 13sex be added to the Income Tax Act (No 58 of 1962) to replace the moribund s 13ter. This provision will not only give greater tax advantages to developers, but will partially extend them to buyers of new or unused property that is bought to let. What then in short is the effect of this new provision?
Developers who qualify under it will be able to write off the cost of all new and unused "residential units" they erect on or after 21 October 2008 at an annual rate of 5%. This write-off also applies to the cost of new and unused improvements to existing buildings. At a rate of 5% a year, building costs can now be written off within 20 years as opposed to the 13ter write-off period of 45 years. Low income residential units (buildings that cost up to R200 000) can be written off at a rate of 10% a year.