Secondary properties and Capital Gains
It is important for homeowners to bear in mind that only one house may be regarded as a primary residence.
Therefore if the property disposed of by the Smiths was their weekend holiday home, SARS would not regard this as their primary residence. They would be unable to claim the R2 million exclusion, says Burman.
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They would each, therefore, declare a net gain of R1.24 million (R2.5m x 50% less R40 000 annual exclusion each)
This would result in R496 000 being included in their taxable income.
Their tax liabilities from the disposal would increase substantially to a minimum of R128 960 and R203 360 respectively.
Possibly more as this additional income could push them into a higher tax bracket, resulting in a combined tax equal to at least 9.5% of the selling price.
Author: Jeremy Burman
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