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You're more likely to face a tax audit if you own pricy property like the Guptas...

by , 14 May 2013
Thanks to their four-day wedding bonanza in Sun City, everything the Gupta family does these days makes headlines. The latest example? The fact that the family's ' large residential estate in Saxonwold has declined in property value over the past few years, despite the family pouring millions into the estate. Here's what to do if you're experiencing a similar tax windfall, to ensure you stay on the right side of SARS...

 
The Gupta family's been in the news lately for its extensive wedding celebrations.
 
Now, they're making headlines for a different reason – their R26.5 million residential estate has received a property tax bonanza, says News24
 
The reason?
 
Here's how the Guptas have struck it lucky tax-wise with their residential property…
 
The 6,000m² homestead has been valued for property taxes at less than a third of the R26.5million that the family have poured into the property.
 
So while the family's paying taxes on a fraction of the property's value, city valuation records show, the valuation has also dropped significantly since the last citywide valuation in 2008.
 
But the Gupta's riches are wrapped in mystery and they are involved in other property, says the Mail & Guardian Online.
 
For example, the family is also believed to have substantial property interests like a stake in the Clifftop Lodge in Welgevonden, a national conservation area in Limpopo.
 
If you have riches like the Guptas, remember that no matter what the particular purpose of purchasing your property, everyone wants to achieve the same general goals when doing so: to maximise profit, reduce tax and protect the asset, says The Practical Tax Loose Leaf.
 
Buying and selling residential property to make a profit? SARS will audit you…
 
But remember that SARS is aware of this.
 
So if the main purpose in buying fixed property is to make a profit on its resale, this may amount to a 'scheme of profit making', and that's a red flag for SARS, which will leave you more likely to face a tax audit.
 
So if the Guptas were to suddenly sell their property, there'd be much interest from the tax authorities, especially due to the fact that the Johannesburg-based property's been found to be undervalued at a time when most property owners in Johannesburg are preparing for an increase of at least 5,3% in new taxes, says News24.
 
They may delay selling the property for a long time to avoid falling into SARS' tax net.
 

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