Herschel Jawitz, CE of Jawitz Properties says the Minister of Finance, Trevor Manuel, presented a conservative budget today in line with previous years, with a shift to more social spending and far less focus on the property market.
From a direct property perspective, the 2007 budget Jawitz is largely neutral with no changes to the transfer duty percentages or the thresholds at which no transfer duty applies. “This was largely expected given the significant relief in the 2006 budget and the fact that the zero threshold for transfer duty at R500 000 still covers the low price / low income market despite increases in property prices over the last year.”
There were also no changes to the thresholds for Capital Gains Tax (CGT), which remains at R1.5 million. Once again we saw a larger increase of 50% in 2006.
As the property market slows down, Jawitz expects to continue to see marginal, if any, relief in both transfer duty and CGT.
“Indirectly, additional spending on infrastructure development and police should continue to contribute to the growth in property prices across the country in both new and established residential areas. The challenge as always will be on delivery at a local level.
“The Minister has put additional large amounts of spending into housing and also made mention of the Neighbourhood Development Programme which invites private participation in the development of previously underdeveloped areas such as townships – both of which are so critical to the future sustainability of the country.
There is some marginal tax relief for tax payers which puts more disposable income in their pockets. Some of this money may come into the property market but my suggestion would be that people use the money towards clearing some debt.”