Everyone knows that creating a financial bolthole through property investment also enables you to generate wealth, and create a financial legacy for your children to enjoy. Property investment is, comparatively, a more robust financial move than plunging your money into the stock market or similarly volatile options. But did you know that SARS has a sexy tax benefit for property investors?
Basically, SARS wants to encourage investment and the provision of rental homes into the market, so SEX13 allows you to decrease your taxable income. A buy-to-let investor can claim an allowance of 55% of the purchase price.
The 4 qualifying criteria are as follows:
- The unit must be new and unused, so buying direct from a developer qualifies.
- Unit must be solely for the trade of the taxpayer, i.e. it must be a rental unit.
- The taxpayer (or entity – could be a trust or company) must own at least 5 rental units, all of which don’t need to be purchased all at once, but the allowance only kicks in once the 5th unit is acquired.
- The unit must be in sunny South Africa.
“Say you purchase 5 units @ R600,000 = R3,000,000 purchase value. SARS will allow 55% of the acquisition cost as an allowance against taxable income. So R3,000,000 x 55% = R1,650,000 that SARS will allow you as a tax deduction over 20 years. This totals R82,500 per annum for 20 years. So, if you are at the marginal income tax rate of 45%, then R37,125 is the tax saving every year…for 20 years”.
“The current high demand for 1 bed apartments in Ferndale is expected to continue unabated for the foreseeable future and rentals of around R5900 per month, excluding utilities, should be comfortably achievable as completion is expected in the 2nd Quarter of 2022. Levies are low and rent to value is around 1% of the purchase price, so the apartments are virtually paying for themselves from day one”
The unique “Wallet” system ensures that prepaid water & electricity are the last items to be settled if rent is short paid by a tenant.
So, if you are looking for solid cashflow, capital growth, and a sexy tax deduction, The Base ticks all the boxes. Contact us today for more information.