Budget Speech 2006 Review - Impact on buying Property

Transfer duty
Tips for Trevor this year included an interesting perspective from Norman Greenfield, who suggests that “The high costs of transfer are deterring retirees from downsizing, depriving younger people of the housing stock. Could transfer duty be waived after age 60 or 65? There is only a limited time left to amortise it…” There are ages to take into account on both sides of a property transaction so this is probably not the right way to proceed. But I agree that a
decrease in transfer duties will encourage the secondary housing market and contribute to promoting home ownership.

With effect from 1 March 2006, houses costing less than R500 000 will attract no duty. The 5 per cent rate will apply between R500 000 and R1 million, and 8 per cent thereafter. The flat 10 per cent rate for companies and trusts is reduced to 8 per cent.

Taking into account the substantial increase in property prices in recent years, I know that this will be welcome relief to all home buyers, and especially first-time entrants to the property market. The cost to the fiscus is R4,5 billion.

The threshold exemption for stamp duties on leases is raised from R200 to R500 per agreement, reducing the compliance burden for taxpayers and the administrative load on the Revenue Service.

Monetary thresholds for donations tax, estate duty and capital gains tax
The tax system contains various monetary thresholds relating to individuals that have not been adjusted for inflation for several years. Changes proposed with effect from 1 March 2006 include the following:
 
· The annual donations tax exemption is increased from R30 000 to R50 000
· Exemption from estate duty is raised from R1,5 million to R2,5 million
· The annual capital gain exclusion will increase from R10 000 to R12 500
· The primary residence exclusion from capital gains tax will increase from R1 million to R1,5 million
· The capital gain exclusion on death will increase from R50 000 to
R60 000.

Budget Speech 2006
 
 
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