Tax and legal

CGT is a tax on the profit one makes on a property when it is sold. the commencement date for implementation of CGT was 1st October 2001. All persons owning property as at that date were required to establish the value of their property as at that date. When selling, the amount of profit would be determined as the additional amount realised over and above the valuation at 1st October 2001.

For properties purchased after 1st October 2001, the profit would be the difference between that purchase price or "base cost" and the price at which the property was sold. In determining the base cost, the following can be added to the purchase price:

• transfer costs, transfer duty, professional fees;
• costs of improvements, alterations and renovations
• agent's commission on the re-sale of the property

If the property sold is the Seller's primary residential property, then the first R1 000 000,00 is exempt from CGT. However, if the Seller has a second or third home, the profit on the sale of such property will be subject to CGT.

The amount of capital gain that will be included in the owner's taxable income is determined as follows:

1. Natural persons - 25% of the gain is included in the taxable income and taxed at that person's marginal tax rate.

2. Companies, Close Corporations or Trusts - 50% of the gain is included in the taxable income of the entity and taxed at that entity's marginal tax rate.