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How does Capital Gains Tax (CGT) on the sale of your own residential property affect you?
A Capital Gain only comes into effect once you have actually sold an asset. CGT was introduced on the 1 October 2001. If you have sold a home since then for ‘above’ R1 million more than it was worth on 1 October 2001 then 25% (of the profit above R1 million) will be added to your taxable income for the year of sale. For tax purposes proof of any profit obtained from the sale of a property from 1 October 2001 must be submitted to the Receiver. For the record most of us have nothing to worry about if we have not received profit above R1 million!
How does Capital Gains Tax (CGT) on the sale of a second (investment) property affect you?
If you have sold a second property since 1 October 2001 then only the first R10 000 (ten thousand Rands) of the profit will be exempt from tax. Of the balance of the profit 25% will be considered taxable income for the year of sale if you are an individual and 50% if you are a Company, CC or Trust. For tax purposes proof of any profit obtained from the sale of a property from 1 October 2001 must be submitted to the Receiver.
Having your property valued as at 1 October 2001 for CGT.
If you have already sold property without having it valued as at 1 October 2001 then you may use a method provided by the Receiver to calculate your profit. This method is the time based apportionment method and takes into account the time that you owned the property before 1 October 2001 in relation to the time after that. For this you will need to provide proof of the original purchase price and date.
More information re CGT can be obtained on the Receiver of Revenue’s Web Site – www.sars.gov.za.
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