Real Estate Investor Magazine South Africa October 2015 | Page 8

Q&A ASK THE EXPERTS Question What is the wisest financial course to take when buying houses to renovate and sell at market value. Can the capital gain be claimed back in tax? I would like to know what contributes to the value of a property apart from the annual appreciation? I know that elements such as renovations done on the property and the neighborhood contributes to the market value of a particular property in an area. The reason why I ask this question is because that I don’t want to solely base my judgment on price. Meyer De Waal Richard Wade of My Budget Fitness answers: I am not aware of any practical financial course that can be followed; however, sound judgment and “knowhow” can only be obtained by experience. I can suggest that you “hook up” with a partner with expertise and enter into a joint venture agreement – do it you in writing that all parties are full aware of their responsibilities and contribution. If you start on your own, you may also be able to achieve your purpose, but may pay a lot of ‘school fees” in mistakes that you make and taking in a partner to show you the “ropes” may be the fastest way to obtain all the knowledge and skill. Remember that you will be working with “big numbers” and small mistakes can cost you thousands of rands. The capital gains that you make will be added to your income tax, not “claimed back in tax’ as mentioned – it is best advised to consult with a tax advisor regarding tax and capital gains tax issues Ask The Property Experts click here 6 of Horizon Valuation answers: P roperty value has two elements – the value of the land and the value of any permanent building with foundations built on it. The value of the land will be affected by the way the neighbourhood changes and the value of the building by the use to which it is put and the way in which it is maintained, improved or enlarged. Price is a product of these two elements and influenced by the quality of both. The more desirable the area, the higher the land price (e.g. Sandton, Clifton) and the newer the development, generally the higher the building value. Look for building quality within your budget and you should make the right investment decision. DO YOU HAVE A PROPERTY QUESTION YOU WOULD LIKE ANSWERED BY OUR EXPERTS? If so, post it on ASK THE EXPERTS on www.reimag.co.za or email [email protected] OCTOBER 2015 SA Real Estate Investor www.reimag.co.za