FAQ: I work in Johannesburg where I bought a townhouse to stay. My wife and three children still stay in Umtata, my hometown, where I have my main home. Will the sale of my townhouse qualify for the primary residence exclusion when I move back to Umtata?
You will have to choose which of the two residences is to be regarded as your primary residence. If you choose the townhouse then the proceeds from the sale of the townhouse would qualify for the primary residence exclusion. However, should you later dispose of your house in Umtata, any capital gain or loss on […]
FAQ: What happens if I no longer ordinarily reside in my home because I have moved to a new home and am trying to sell the old one?
Generally a person is not entitled to more than one primary residence at the same time. However, you will be treated as having been ordinarily resident in your primary residence if you were not ordinarily resident during a period not exceeding two years for any of the following reasons (paragraph 48 of the Eighth Schedule): […]
FAQ: What happens if I dispose of my primary residence in a joint estate, and I have a capital gain in excess of R2 million during the 2012 year of assessment?
The disposal of a primary residence that falls within the joint estate of spouses married in community of property is treated as having been made in equal shares by each spouse and the primary residence exclusion will be apportioned between them .(paragraphs 14 and 45(2) of the Eighth Schedule ). Example Husband Spouse Joint […]
FAQ: Does the primary residence exclusion apply to a residence held through a company or trust?
No, because the owner must be an individual or special trust. However, the estate planning, limited liability, or other considerations that led to the property being placed in a company or trust may outweigh the advantage of the primary residence exclusion.
FAQ: Is the primary residence exclusion an unlimited exclusion?
No, certain limits have been placed on the exclusion. The exclusion will not apply to any capital gain or loss in excess of R2 million for the 2013 to 2018 years of assessment (2007 to 2012: R1,5 million). To the extent that the gain exceeds R2 million, the excess must be taken into account as […]
FAQ: I enter into a long-term lease for a building which I then use as my primary residence. I then sell this right for a profit of R2 million. Can I claim the primary residence exclusion?
Yes. In order to have a primary residence an individual or special trust must have “an interest” in a residence. The term “an interest” includes, among other things, a real right and a right of use or occupation. A long-term lease may comprise a real right (for example, a registered lease of at least 10 […]
FAQ: Why does the time-apportionment method give different results in the scenarios set out below?
SCENARIO 1: An individual acquired an office block 16 years before 1 October 2001 for R250 000. A set of storerooms were added at a cost of R60 000 two years before 1 October 2001. A new wing was added at a cost of R300 000, a year after 1 October 2001. The office block […]
FAQ: Can interest incurred on the acquisition of shares in a private company be added to base cost?
No – this is specifically prohibited by paragraph 20(2)(a) of the Eighth Schedule. However, paragraph 20(1)(g) allows one-third of the interest incurred in acquiring listed shares and participatory interests in collective investment schemes to be added to base cost.
FAQ: Do paragraphs 26 and 27 apply to listed shares and units in a unit trust?
Generally yes, but these rules do not apply to – foreign listed shares and foreign unit trusts for which you have not determined a market value; or when you have adopted the weighted average method for determining the base cost of the relevant assets.
FAQ: I bought LISTED shares in 1999 for R100 and sold them in 2013 for R70. Their market value on 1 October 2001 was R60. Am I liable for CGT on the R10 (R70 – R60) even though I made an actual loss of R30 (R70 – R100)?
The answer depends on which asset identification method you have adopted. First in, first out or specific identification If you adopted the first-in-first-out or specific identification method for identifying which shares you have disposed of, your valuation date value will be restated to R70 under paragraph 27(3)(a) of the Eighth Schedule. There will, therefore, be […]
