Real Estate Investor Magazine South Africa July 2015 | Page 25

instalments are about R5 000 per month. Thus, each
flat is paying for itself, and you have R2000 to spare
on each one which can assist in paying towards your
rent on your house. Thus, you have two properties that
are paying off their own bonds, and you have an extra
R4000 monthly to contribute towards your monthly
rent on your home. Your monthly costs are reduced
to R9 000 and you own two apartments that are not
costing you anything, with a value of R2 million.
There are, however other factors to consider. The
South African Revenue Service encourages South
Africans to purchase their primary residences in their
personal names. Thus, there is a Capital Gains Tax
(CGT) exemption that is enjoyed when you own the
home that you live in. With investment properties,
CGT will apply, and hence any capital gain will be
taxed at between 10% and 22%, depending on the
nature of the legal entity that owns the property.
When doing the sums, it is also important to
factor in the income tax that will b