Tax concessions

There is a discrepancy between the supply of reasonably priced rental accommodation and the demand for it in South Africa – far more people are looking to rent than to buy.

In the early 1980s, to incentivise private-sector engagement in low-cost housing, government introduced legislation that allows developers, under certain conditions, to deduct building costs from tax.

The legislation was confirmed and enhanced in the Revenue Laws Amendment Bill 80 of 2008's Article 13. The enhancements also partially extend the tax opportunity to buyers of new or unused residential property that is bought to let.

The effect of the Article 13 legislation

This means that developers who qualify are able to write off the cost of all new and unused residential units they erect at an annual rate of 5%. The write-off applies also to the cost of improvements to existing buildings.

Purchasers of residential units are also entitled to the write-off up to 55% of the acquisition price.

Usefully, this allowance is not apportioned for part of year so even if a building is acquired on the last day of a tax year, the full 5% may be claimed as a deduction.

How do you qualify for this tax break?

You must purchase a minimum of 5 residential units in South Africa
They must be new and unused residential units
Units must not be for your personal use
You must operate a ‘rental business’

What is The Visual Property Club?

The Visual Property Club comprises a group of investors who have responded to this uniquely powerful wealth-creation tax incentive. Fundamentally, this involves tax-friendly investments that generate an income while simultaneously building an appreciating asset base.

For its members, the Club manages the time-expensive and bureaucratically complex aspects of tax-efficient property development.

Investor benefits:

Save tax
Build an asset base
Gain rental income
Rental business is run on your behalf
Expert estate planning and trust structuring advice
Professional auditing input and advice by independent auditors
Private banking advice and assistance with securing of bond
A pain-free process through SARS
Efficient purchase, conveyancing and transfer of properties
Ongoing management of the properties, leases, finances of investor clients
Visual retains ownership of ±15% of all properties that it develops, ensuring that it will remain your property partner for years to come

Tax benefits:

Write off the cost of new and unused residential units at an annual rate of 5%
Write off up to 55% of apartment acquisition price
Allowance is not apportioned for part of the year so if units are acquired on the last day of a tax year the full 5% may be claimed as a deduction

The Visual Property Club provides a total turnkey solution to its investors.

For a personal consultation and reviwe of your potential tax savings contact Roelf van der Merwe: on: +27 (0)21 976 4663 or at: roelf@visualinternational.co.za or roelf@vrprop.co.za

For more information visit The Visual Property Club website »

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Tax concessions

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