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Think selling your private residence is always CGT free? Think again...

by , 11 August 2014
Capital Gains Tax (CGT) is all about SARS taking a bite out of your capital gains. Now normally SARS reserves capital gain for companies. But what you may not know is some of your privately owned assets fall victim to CGT too.

Assets, such as your home, can become subject to CGT and it's important to know when they do. Else, you may owe SARS money without realising it. If you don't pay that money, SARS will happily penalise you.

Read on to discover when your 'home sweet home' becomes a CGT death trap...

 

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Here's when your home is subject to Capital Gains Tax

 
If you sell your home and you make a profit of more than R2 million, SARS will tax you on the amount over that R2 million.
 
Remember, you must exclude the amount you put into your house in terms of upgrades, repairs and improvements from your proceeds. It's only a profit if the amount you get for the house covers those extra costs. 
 
SARS taxes this because it means you made a capital gain on the sale of your home.
 
And there's one other situation when the sale of your home is subject to CGT...
 

Here's the second situation when the sale of your home is subject to CGT

 
SARS will also charge you Capital Gains Tax if your total property is bigger than two hectares. In this case, SARS taxes the amount you get for any area over those first two hectares.
 
If this is the case, you need bring in an assessor to determine the amount of capital gain you got from the extra land.
 
So there you have it. Having a big expensive house is a wonderful luxury but it's also a Capital Gains Tax magnet. 
 
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