| A leading property professional has thrown down the gauntlet to the tax authorities, calling for an increase in the Capital Gains Tax (CGT) threshold on primary residences. Bryan Biehler, joint managing director of Huizemark, says in an October 10 press release that property has increased at unprecedented levels since the introduction of CGT in October 2001, hence the need for a review of the R1m threshold on a primary residence. “No-one could have forecast the pace of the increases which have averaged at around 30 percent per year over the past three to four years,” he said. “When the limit was set four years ago, the tax authorities would have based their calculations on historical property prices and a future increase of around 10 percent. SARS needs to re-look at the numbers.” By way of example, Biehler worked out that a property in Johannesburg’s northern suburb of Bryanston that was valued at R500 000 in 2001 could have escalated in value to around R2m in 2005. “That represents an increase in capital value of R1,5m, which means the seller would be liable for capital gains tax of nearly R50 000 on the R500 000 profit.” Similarly, a Blairgowrie property valued at R300 000 four years ago could today be worth around R1,4m. Again, the seller would have to pay R10 000 in capital gains tax on the R100 000 profit. Saying that the current situation was fundamentally unfair, Biehler called for the threshold to be increased to R1,5m. “The market has changed dramatically and the tax laws should be amended to reflect this shift.” |