Property tax blow for homebuyers in South Africa

 ·23 Feb 2024

Although experts in the property market have expressed relief over property taxes remaining unchanged, there are concerns over the transfer duty exemption and the end of the household solar rebate.

Following the 2024 Budget, Samuel Seeff, chairman of the Seeff Property Group, said that the group would have liked to have seen a cut in property taxes – Transfer Duty and Capital Gains Tax – to boost the market, but were nonetheless pleased that there will no hikes this tax year.

However, Seeff said he was disappointed that Finance Minister Enoch Godongwana did not take the time to increase the transfer duty exemption threshold from R1.1 million, particularly as this covers the more affordable price bands where many buyers face affordability challenges.

Pam Golding CEO Andrew Golding said there was unlikely that there would be further relief on the transfer duty in this year’s Budget, as the Minister’s imperative is to derive increased income.

Golding said that this will impact the ability of first-time home buyers wanting to acquire their own homes.

Currently, properties below R1.1 million will avoid any transfer duty payments, and Lightstone data shows that most first-time buyers look to buy in the R700,000 to R1.5 million price bands.

“While there were thankfully no real surprises or major tax increases, from a housing market perspective, it is regrettable that today’s National Budget did not seize the opportunity to extend the solar rooftop tax incentive for residential properties, as this expires at the end of this month,” Golding said.

“This enabled households who invested in solar panels to receive 25% of their solar spend back as a tax credit.”

“Apart from hoping for an extension of this incentive, it would have been beneficial to homeowners if it had included additional costs such as generators, invertors, batteries – plus those used for security purposes – among others.”

The business incentive for solar panels will run until 2025, but Golding said that an extension would help homeowners already beset with high electricity, fuel and food costs.

He added that it is crucial that there is a significant increase in investment in infrastructure as this will boost market sentiment, including the property market, by creating a favourable environment to conduct business, which would increase job creation and fuel the economy.

“In this regard, it is encouraging to note the government’s intention to foster Public Private Partnerships, notably regarding financial and technical support in the logistics sector, namely rail and ports, among others,” he said.

“Support for those impacted by floods and other climate change factors via the Climate Change Response Fund is also to be welcomed.”

Read: South Africa registers R7.8 billion new solar in just three months – but there’s a big problem

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