Real Estate Investor Magazine South Africa February 2015 | Page 41

RESIDENTIAL

annual tax allowance of 5% on the “cost to the taxpayer”
of residential investment property. Allowances also
exist for commercial and industrial property.
• Tax efficiency due to pooling – a tax positive
investment property can be offset against a tax
negative property in the same entity (the use of
Trusts however extends this application).
• Leveraging and tax relief – utilising mortgage
bonds (“other peoples’ money”) to acquire
investment property results in a more desirable tax
position due to the tax deductibility of the interest
on the bond.
• Trust and the conduit-principal – with the
assistance of specialist Trust advice, the use of
the ‘conduit-principal’ can result in enormous tax
savings. Comprehensive anti-avoidance exists
in the Income Tax Act though, therefore expert
Trust advice is recommended.
• Home office expenses – better suited to full-time
property investors, certain expenditure related to
your home is tax deductible.

“Property purchased into the
particular company indirectly
forms part of the investor’s
personal wealth.”
Whenever we consider making any investment,
we always demand the very best and most efficient
mechanism to maximise our returns. Yet, often we don’t
structure our investments correctly, resulting in severe
losses due to all the structural inefficiencies. These are
unnecessary losses that place all our personal wealth
under unnecessary risk.
Does it make sense not to get the basics right? Not
to structure our investments in the most efficient and
effective way so that we get the maximum return from
our hard-earned incomes?
These are the very basic fundamentals that we need
to start living the life that we want to live, and not the
life that we are forced into.

RESOURCES
FinServe Group
www.reimag.co.za

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February 2015 SA Real Estate Investor

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