Property tax implications.
The decision to sell your home is a big one, and generally involves both emotional and financial factors.
Often it coincides with a change in circumstances.
This can be new job requiring relocation, a baby on the way, or perhaps children leaving the nest.
The reasons for selling your home are many and varied.
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It is important to consider the tax implications so you are prepared for any potential liability that may arise.
Jeremy Burman of Private Client Holdings says that tax on capital gains was introduced with effect from 1 October 2001.
This applies, subject to certain exclusions, to gains made on the disposal of capital assets from this date.
We often hear of the term capital gains tax, which is a misnomer as no separate tax applies to capital gains.
Rather a portion of the gain, 40% in the case of individuals, is included in your taxable income.
This is subject to income tax according to the sliding scale along with your other earnings for the tax year.
The effective tax rate payable on a capital gain is dependent on the income tax bracket into which you fall.
This can range from 0% for individuals under the tax threshold to 18%.
For those who have income in excess of R1.5 million it is 40% of the gain x 45% marginal tax rate.
Author: Jeremy Burman
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