Section 13quat was introduced to address the issue of urban decay within inner cities and to maintain existing infrastructure while encouraging investment in certain property. This section thus provides an accelerated depreciation allowance on the costs of buildings erected, added to, extended or improved and which are within the urban development zones (UDZ).
How long is the incentive available?
The UDZ incentive has, in terms of the 2023 Budget Review, been extended for two years from 31 March 2023 to 31 March 2025.
What are the requirements to claim UDZ tax deduction?
A taxpayer will be eligible to claim a deduction if all of the following requirements are complied with:
- Building requirement
- UDZ requirement
- Trade requirement
- Owner requirement
- Date requirement
There are rules and regulations which determine what you can claim and how to work out what the tax incentive will be. These include:
- The costs that can be claimed
- The position of the developer
- How we treat purchases from developers
- The amounts that can be deducted
- How improvements to buildings are dealt with
- Buildings on land owned by third parties
- Other deductions
There are also certain documentation which must be submitted to SARS or retained for audit purposes. Find out more.
In the event that you want to object to a UDZ deduction being disallowed, the normal Notice of Objection process must be followed.
Queries relating to the interpretation of section 13quat may be forwarded to [email protected]. All other operation issues must be directed to the relevant SARS branch office.