FINANCE
Unfortunately , tax is often overlooked , so here ’ s an overview of what you need to know .
When you buy
When you buy a property , you will either pay VAT or transfer duty , but never both . VAT is charged when a VATregistered business sells a property , typically as a new residential development . Transfer duty , on the other hand , is levied when buying an existing residential property from its owner .
Importantly , transfer duty cannot usually be financed through a home loan , so you ’ ll have to come up with the money yourself . On higher priced properties , transfer duty can run into the hundreds of thousands . With a new property , VAT is included in the purchase price , so it is already covered by your loan . For first-time buyers , a new property can be much easier on their pockets .” It ’ s also important , when shopping for property , to keep
in mind that new properties are cheaper at the same advertised price than their second-hand competitors , due to the impact of the transfer duty .
For as long as you own Once you take ownership of your property , you ’ ll immediately start paying municipal taxes . Whereas transfer duty and VAT are paid over to SARS , municipal taxes are used to fund city services , infrastructure and salaries . When planning to buy , you should consider how this tax will impact your monthly cash flow . We have , startlingly , had several clients who were surprised to learn that they will receive a monthly tax bill on their new home . The municipal tax is in addition to consumption charges for water and electricity and expenses like levies payable to the body corporate or homeowners ’ association .
Furthermore , if your children are over 18 , they can be the primary applicant and include you in their application , which can be fully funded by the parents . This comprehensive approach makes the Greek Golden Visa a versatile and family-friendly option for global mobility .
When you sell
If you sell your property , you ’ ll pay capital gains tax ( CGT ). This is where things get a bit complicated . CGT is calculated on the difference between what you paid for a property and what you ’ re selling it for . Individuals are taxed on 40 % of this profit at their marginal tax rate when it comes time to declare their annual income to SARS . However , if this is your primary residence ( i . e . your home ), the first R2 million of your profit is tax free .
64 REI MAGAZINE AUGUST