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How to save tax on your rental property
Trafalgar - South Africa
Everyone knows that there’s more to owning a rental property than finding a tenant and collecting the rent – but the one thing that most private landlords forget to do is keep records for income tax purposes.

In fact many private landlords don’t even realise, says Andrew Schaefer, MD of leading national property management company Trafalgar, that if you own one or more rental properties, the SA Revenue Service (SARS) requires you to calculate your expenses and profits in relation to these properties – and to pay tax on your profits.

“Most think they can keep whatever rent they receive without any reference to SARS, especially if they are only just breaking even on their rental properties, but this is actually a contravention of the Income Tax Act. Indeed, SARS says that even money received for the occasional rental of a holiday home or for the rental of a room in your home or a cottage on your property forms part of your income and must be declared to the Receiver, or you could find yourself in very hot water.”
How to save tax on your rental property

Residential building statistics
Absa - South Africa
Levels of residential building activity down in early 2015 from a year ago

Building activity in the South African market for new housing, as reflected by the number of building plans approved and the number of buildings completed, started 2015 on a relatively low note, with both the planning and the construction phases recording a decline in volumes in January from a year ago. These trends are based on data published by Statistics South Africa in respect of building activity related to private sector-financed housing (see explanatory notes).

The number of new housing units for which building plans were approved dropped by almost 12% year-on-year (y/y), or 562 units, to 4 145 units in January from a year ago. This was the net effect of a significant drop in plans approved in respect of houses less than 80m², whereas plans approved in the segment of flats and townhouses jumped by just more than 30% y/y in January. The category of houses larger than 80m² showed negligible growth of just 1% y/y in the first month of the year.

The number of new housing units reported as constructed declined marginally by 1,6% y/y on the back of a contraction in both the segments of houses, whereas the number of flats and townhouses posted growth of almost 30% y/y in January.
Building stats Jan 2015

What is gearing, and why does it make property investment so attractive?
Rawson - South Africa
If you’ve been doing any kind of research into property as an investment, you’ll doubtless have come across the term “gearing” at one point or another. It’s widely regarded to be one of the main reasons property is such an attractive investment. But what is gearing? And how does it actually work?

“To explain what gearing is,” says Bill Rawson, Chairman of the Rawson Property Group, “let’s first take a look at a conventional investment like a savings account. If you want to earn interest on R1000, you have to put R1000 into the account. Your money is the only money that is working for you. This applies to most investment types – but not to buying property.”

Rawson explains that the difference with property is that you can finance your investment at least partially through a bank, giving you access to an asset worth far more than you could afford on your own. In other words, to buy a house worth R1 million, you may only have to put down R100 000 in cash. Should that house increase in value over time, any profit on the sale (after paying back your loan) is yours. It’s a little bit like getting the interest on R10 000 in your savings account, even though you only put R1000 in. Why? Because it’s no longer just your money working to earn profits; gearing allows you to put the bank’s money to work for you as well.

Mortgage Market Barometer
FNB - South Africa
Like the property market to which it is directly linked, the mortgage lending market remains a very comfortable place to be, with significantly elevated levels of lending compared with the lows of 2009, and sharply lower bad debt levels since those days.

However, with interest rates moving in a “sideways-to-higher” direction, a stagnant looking economy as 2015 gets under way, and no further meaningful improvement in mortgage loan affordability on the residential side, it is perhaps not surprising that further growth in new residential mortgage lending had been slowing as 2014 drew to a close.

Therefore, it appears increasingly likely that any near term residential mortgage growth revival may be to higher single-digit growth rates at best.
Mortgage Market Barometer - March 2015

Back-up offers becoming commonplace
IolProperty - South Africa
Back-up offers are becoming commonplace, said Carol Reynolds, Pam Golding Properties area principal in Durban, Durban North and La Lucia. "From a seller's perspective, having a back-up offer is a wonderful contingency plan, as, in the event of the first offer falling away, a second offer is safely in place.

"From a buyer's perspective, there are a number of factors to take into consideration - the most obvious being that a back-up offer, as the name suggests, is a secondary offer that will only become enforceable if the first offer lapses or is cancelled. As a result, the second buyer is essentially second-inqueue, and has no claim to the property unless the first sale falls away."

Reynolds said there were two primary scenarios where back-up offers came into play. In the first scenario a suspensive sale is conditional on the sale of another property. In this instance, the sale agreement needs to iron out all the steps that should be followed in the event of the seller receiving another offer before the first buyer fulfils the suspensive conditions.

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