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Accelerated depreciation

In URBAN DEVELOPMENT ZONES (UDZ) the erection/acquisition or improvement of buildings are subject to an allowable deduction in the form of an accelerated depreciation allowance. This deduction is available until 31 March 2021.

  • A deduction will be allowed for the cost of the erection, extension, additions, acquisition, or improvements of any commercial or residential building or part of a building within an approved urban development zone which is to be used solely for the purpose of that trade.
  • The deduction will stop when the building stops being used solely for the purpose of trade or if it is sold.
  • The allowable amount will be calculated as follows:
    • Refurbishment of a building – 20% straight-line depreciation allowance over a five-year-period (where the existing structural or exterior framework is preserved)
    • Construction of a new building – 11 year write-off period (20% in the first year and 8%per annum thereafter for the next 10 years. Prior to 2008, 5% instead of the 8% write-off)
    • Refurbishment of a low-cost residential unit – 25% straight-line depreciation allowance over a four year period (where the existing structure or exterior of framework is preserved).
    • Construction of a new low-cost residential unit – seven year write-off period (25% in year one, 13% over the next five succeeding years and 10% in the seventh year)
  • A deduction is also available for a first time buyer who purchases a building or part of the building from a developer under subsection 3B.
    • Refurbishment of a building: 30% of the purchase price of that building or part of the building.
    • New building: 55% of the purchase price of that building or part of the building.

The following forms can be downloaded below and must be completed and retained for a period of five years after the date of submission of the return in which the amount was claimed:

UDZ1: This form is for deduction claimed for the erection or extension of or addition to or improvement of a building/part of a building within an Urban Development Zone

UDZ2: This form is for deduction claimed for the purchase of a building/part of a building within an Urban Development Zone”

UDZ3: This form is the developer’s declaration of compliance with the requirements of section 13quat.

UDZ4: “Developer information”. This form must be submitted to: 
Legal and Policy Division: Legislative Policy
Private Bag X923
Pretoria
0001
or sent via e-mail to [email protected]


Top tip: The UDZ1 and UDZ2 forms must be retained for a period of five years after the date of submission of the return.

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