By Zuko Komisa
With owning a house being one of the biggest purchases many will make, the ownership structure of their property is often a question many South Africans tend to ask.
Kaya Biz with Gugulethu Mfuphi spoke to Adelaide Kekana – Founder and MD of Tax Co and Associates who gives context on which options work out the best when it comes to the ownership structure of your property.
LISTEN TO THE FULL CONVERSATION HERE:
Your primary residence is where you and your family spend the majority of the year, if not all of it. There is a limit to how many primary residences you can own.
Kekana explained how If you own your house (or own it jointly with your partner), you can benefit from the main residence exception from Capital Gains Tax (CGT) when you sell it.
“The first thing that happens when you sell your property, it will depend on whether it is your primary residence, which is your home or an investment property when you sell your home SARS gives you an exclusion of 2 million” said Kekana
She also added that on the first R2 million of a capital gain or loss on the sale of a residential house, SARS offers a reduction. If the gain is R2,5 million, for instance, R2 million must be ignored while R500 000 will be considered a capital gain.
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Profits from assets that were purchased for less money and then sold for more money are subject to the capital gains tax (CGT). The current CGT rate for individuals in South Africa is 18%.
Therefore, you will benefit from the primary residence exclusion of R2m if you own your principal residence in your name.
Kekana also gave what is the best options for different circumstances when it comes home ownership
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