select
|

How first-time buyers can pay no tax and get up to 44% more space

Buying a newly-built home has many attractions, but for most first-time homebuyers, saving tax is no longer one of them.
 
For many years, one of the biggest incentives to buy off-plan or into newly completed developments has been the fact that the “price you see is the price you pay”, with VAT being built into the sale price and buyers thus not being required to find additional cash to cover transfer duty.
 
“However, with the transfer duty threshold currently at R900 000, that is simply no longer true for many first-time buyers, who are currently paying an average purchase price of around R750 000 to R800 000. The truth is that there is now no tax at all payable on pre-owned properties costing less than R900 000, but still 14% payable on newly-built homes in this price bracket.
 
In other words, those buying the new homes will effectively be getting 14% less floorspace for their money than those who buy pre-owned homes – and will usually still have to come up with some cash to cover the additional transaction costs such as legal fees and bond registration fees, which are the same for both types of property.
 
Meanwhile, due to the fact that building costs continue to increase at more than twice the rate of inflation, newly-built homes are currently at least 30% more expensive than pre-owned homes of the same size. Looked at another way, newly-built homes are likely to be at least 30% smaller than pre-owned homes at the same price point.
 
This means that those buying for less than R900 000 could be getting as much as 44% more floorspace when they buy a pre-owned home instead of a newly-built one – and we believe this has much to do with the current resurgence of interest in many of the older and lower-priced suburbs in our cities, especially if they also happen to be close to good schools, shops and workplaces, and well-served by public transport.
 
There are of course many advantages to buying a newly-built home, not the least of them being the fact that they are usually much lower maintenance properties, and often have better security provisions. Modern fittings and finishes are also a big attraction.
 
However, we are seeing huge interest among young buyers in older city centre apartments that are inevitably more spacious than newly-developed ones, and especially attractive if they have recently been renovated or revamped and are in a city improvement district with good security and an active nightlife.
 
Similarly, pre-owned townhouses and smaller houses in the older, inner suburbs are also in high demand, especially among young families who want to have everything they need close by and prefer to use public transport to get to work rather than sit in traffic every day.
 
“Many of these buyers are also happy to buy homes that are in less than perfect condition and renovate them over time, in return for a lower price and a convenient location. They are bringing a new energy to these areas and are often also prepared to get involved in community efforts to improve and secure their neighbourhoods.
 
“We see this as a healthy, positive trend that will help to reverse the decay that has taken place in many inner suburbs, and to preserve and increase the value of the housing stock in those areas, while also encouraging the establishment or re-establishment of many small businesses and the creation of new employment opportunities.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 24 Nov 2017
      Demand for secure estate living in Hout Bay has risen sharply in recent years, precipitating a spike in development with estate homes now accounting for 20.24% of the property landscape with the launch of an exclusive new gated development on 26 November adding 20 more units to the existing 1250 estate homes.
    • 24 Nov 2017
      There are some things that money can’t buy – spectacular views from Mouille Point to the V&A Waterfront and a trendy and lively neighbourhood that encapsulates the very best of the Cape Town lifestyle.
    • 24 Nov 2017
      Tshwane’s four-bedroom Mayoral mansion, nestled among ambassadorial residences in the upmarket suburb of Muckleneuk, fetched R5.1 million after spirited bidding at High Street Auctions’ final sale of the year.
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK