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If your home doesn't meet these three requirements, you'll have to pay Capital Gains Tax

by , 11 August 2014
Most people assume Capital Gains Tax (CGT) doesn't cover their private homes. Now this assumption is mostly true because your home is your primary residence and not business premises, but there are times when SARS won't see your home as such.

That's when you'll run into problems with CGT because you'll suddenly need to pay SARS tax on your home.

To help you avoid this complication and possible penalties, we're revealing the three requirements your home must meet for SARS to consider it a primary residence...

 

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SARS won't consider your home a primary residence if it doesn't meet these three requirements

 
Requirement #1: You or a special trust must own or have an interest in the house. If a trust owns your house, the trust can't be a company, close corporation or a trust other than a special trust.
 
Requirement #2: You and your spouse, as the owners or the beneficiaries, must live in the house as your main residence.
 
Requirement #3: You must use the home mainly for domestic or private residential purposes. 
 
If your home meets these requirements, it's a primary residence. SARS won't charge you CGT on it unless you make a profit of more than R2 million when you sell it or it's bigger than two hectares. If you have a home office, SARS will tax you on any capital gains you make through this part of your house
 
It's also important to remember that the house keeps its primary residence status even if your spouse lives in the house, but you, the owner, don't.  This is important if, for example, you work in a different part of the country.
 
Keep these requirements in mind to prevent any confusion.
 

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