a specialist you can not only mitigate risks, but you can also take advantage of opportunities as they arise.
4Lock in today’ s rate for tomorrow’ s investment
Look for a personal broker who can assist you in navigating the wild world of currency markets. If you are a company or an individual who knows what currency commitments you have in the coming months, find a broker who can assist you with forward exchange contracts, where you can literally lock in today’ s rate for settlement at a given time in future.
So, if you want to buy a property offshore in the future, why not hedge now whilst the Rand is relatively strong? This way if the Rand does one of its spectacular crashes in future or if South Africa receives a credit downgrade, at least your plan to invest offshore will not remain a dream.
5Assistance with clearance for offshore Capital Investment Allowances
If you’ re planning to make a serious offshore investment from South Africa, you will probably have heard of your capital investment allowances. There are, broadly speaking, two types: Your discretionary allowance and your capital allowance.
South African residents who have a valid green barcoded ID can avail themselves of their R10 million per year capital allowance as well as a further R1 million discretionary allowance.
If you plan to just use your discretionary allowance you do not require any tax clearance. However, one needs to acquire a foreign tax clearance certificate from SARS for any capital investments that exceed R1m per year. An expert broker can help with the admin for applying for these clearances to ensure you take full advantage of your offshore allowances.
Where is the Rand going in the next six months? We all know that trying to figure out where the Rand is going is notoriously difficult. It is often considered one of the world’ s most volatile currencies, and for good reason too. However, a successful offshore investment requires one to occasionally assess prevailing winds and decide which way to go.
In 2017, the Rand has firmly returned to pre- Nenegate levels and the Pound has weakened substantially because of the fallout from Brexit. The Dollar, thanks to reality TV-star-turned-President Donald Trump, is volatile too. All this means it’ s an excellent time to prepare to externalize funds from South Africa for investment purposes.
In my view, and looking at the fundamentals, the Rand could well break into the R12 / USD range in the short term. However, we believe that heading towards the end of 2017 we could see it weaken back into the R15 / USD.
RESOURCES
Sable International
www. reimag. co. za MARCH 2017 SA Real Estate Investor 55