Capital Gains Tax Amendments
Category Property News
The Budget Speech was conducted at the end of February 2012 and with “much surprise” the already hefty Capital Gains Tax has been increased.
How does this affect us?
Gordhan says that as of 01 March 2012 the Capital Gains Tax (CGT) inclusion rate for individuals and special trusts will be increased from 25% to 33,3%. Companies and other trusts will be increased as well from 50% to 66.6% and to mitigate the impact on middle-income earners, various exclusion thresholds will be increased. To limit the impact of capital gains taxation on middle-income households, the exemption thresholds for individual capital gains and for primary residences will be adjusted significantly.
The following exemptions for individual capital gains are increased from 1 March 2012:
1. The annual exclusion is increased from R20 000.00 to R30 000.00
2. The exclusion amount on death from R200 000.00 to R300 000.00
3. The CGT rebate on the sale of your primary residence is increased from R1 500 000.00 to
R2 000 000.00 – This could become quite handy.
As mentioned in previous articles a capital gain is generated when you sell one/all your assets for more than what you paid for it. This tax can normally hit you quite hard when you make a considerable profit on the sale of an immovable property. And even harder when it is a generous profit on a secondary property where the rebate does not come into play or it is a property belonging to a Trust/CC/Company where there is no rebate either.
This being said if you still own your primary residence in a CC/Company/Trust it is important to take note of the allowance which SARS is giving until the end of 2012 whereby you can transfer your primary residence free of transfer duty (which is payable to SARS depending on the value of your property in normal transfers) into your personal name. This will then allow you to sell your primary residence at a later stage without having to pay, what could have been, a very high tax on the profit of your sale.
The deadline to transfer your primary residence from your Close Corporation/Company/Trust to your personal name without have to pay Transfer duty to SARS is 31 of December 2012.