Land Owned By Third Parties

Here we consider constructions and improvements to buildings which are located on land that may be owned by a third party.

What happens here?

Normally the allowance would only have been available to the taxpayer carrying out the improvements if the taxpayer was the owner of the property.  However, in the event that the property is owned by a third party the “owner requirement” stops the lessee from deducting the costs incurred on any improvements.
As a result, depreciation rules now apply to lessees that hold rights of use or occupation of government-owned property, property owned by:
  • certain specified exempt entities;
  • the government of the Republic in the national, provincial or local sphere;
  • property owned by parties to a Public Private Partnership or
  • Independent Power Producer Procurement Programme. 
Lessees that make improvements to property owned by qualifying third parties are treated like owners of the property. Consequently, these lessees will be eligible for the specific depreciation allowances provided for under applicable provisions of the Act.


Last Updated: 10/11/2020 11:53 AM     print this page
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