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Invest in a real estate investment trust to legally avoid capital gains tax!

by , 08 February 2013
With the budget speech just weeks away, mosttax payers are keen to hear about potential tax changes. One change that's guaranteed to take place is the implementation of REITS or real estate investment trusts from 1 April 2013. Here's how you can take advantage to reduce your company's tax burden...

The proposed REITs or real estate investment trusts arealready recognised in most of the key property markets internationally.
Real estate investment trusts are companies that buy, manage and operate real estate and distribute at least 90% of their profits among shareholders.
When they're implemented in South Africa, they'll bring about much needed tax and regulatory changes that you'll benefit from in the long term, says the SA Commercial Property News website.
Tax benefits from investing in a REIT

Converting to a REIT reduces a company's tax burden, writes Reuters.
While last year's budget speech saw an increased capital gains tax inclusion rate, you won't have to pay capital gains tax or CGT on the disposal of assets under the REIT legislation.
CGT is usually calculated on the amount by which the proceeds from the sale exceed the base cost of the asset, says FSP Business.
Now you won't have to worry about a 200% penalty from SARS for the disposal of assets at the wrong time.

From 1 April 2013, any qualifying company with a tax year starting on 1 April or after can adopt the new SA REIT structure at the start of its tax year.

'Together we are shaping a solid base for South Africa's listed property sector to grow with tax certainty,' says Norbert Sasse, Property Loan Stock Association (PLSA) chairperson states on the SACommercialPropNews website.

Do your research now to find out about the best REITs and take advantage of this legal tax loophole once it's implemented on 1 April.

If you need more information on 3 Instances where you don't have to pay Capital Gains Tax…get your hands on Capital Gains Tax 101: Your ultimate guide to slashing Capital Gains Tax here!


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