Budget break for house hunters
Transfer cost cut for properties below R2.25-million.
AS of yesterday (Sunday), Zululanders on the lookout for a new home with a budget of less than R2.25-million, can enjoy a price cut in transfer duty.
When Finance Minister Nhlanhla Nene delivered his national budget speech on Wednesday, he announced there will be no transfer costs for properties costing less than R750 000 (previously set at R600 000) and only 3% required in duties for houses valued between R750 000 and R1.25-million.
This news came as a welcome relief for middle income households.
If a property transaction is not subject to VAT, a purchaser must pay transfer duty to the SA Revenue Services (SARS) in terms of the Transfer Duty Act.
Properties valued between R1.25-million and R1.75-million will now have duty of R15 000, plus 6% of the value above R1.25-million.
House prices between R1.75-million and R2.25m will have a transfer price tag of R45 000 plus 8% of the value above R1.75-million.
Sadly, those interested in more expensive properties will pay a higher price, with tariffs significantly bumped up by the treasury.
For homes costing more than R4-million, liabilities will rise to R85 000, plus 11% of the value above R2.25-million.
‘The reduction in transfer duty will provide some relief and incentive for aspirant home buyers in the lower end of the market, while the decrease in transfer duty on property transactions in the price bracket between R750 000 and R2.3-million is also welcome news,’ said Pam Golding Property Chief Executive Andrew Golding.
‘However, the increase in transfer duties on property transactions above R2.3-million is regretted, as this places a further burden on the already onerous list of costs involved in selling and buying property.
‘While one may argue that those seeking to acquire a home with a price tag of R2.3-million or more can afford it, the fact is that people who want to buy a house need to find a chunk of cash in addition to the deposit.’
Shepstone & Wylie Attorneys pointed out the rate cut for middle income buyers will ‘no doubt boost the residential property market in the R2.3m and below range’, but the substantial increases for upper brackets will not have any major effect on the market.
‘Many industrial and commercial properties are owned by VAT vendors and sales of such properties attract VAT rather than transfer duties.’
