SALT: A new residential complex
LET’S TALK TAX INCENTIVES
WITH THE URBAN DEVELOPMENT ZONE
This allowance was introduced 2003, and has been rolled and amended at various times since then. It is contained in Section 13quat of the Income Tax Act, and was designed to encourage inner city renewal and revival.
It is a depreciation type allowance, which allows qualifying investors to make significant deductions from their taxable income, which could have the result of either reducing their income tax liability, or creating a tax refund.
By design, this is a brief introduction to the topic, to explain the benefits available. Where needed, more detailed advice should be sought.
The key points of the UDZ allowance are as follows:
- The allowance is available to either the developer, or the first owner who buys from the developer.
- The allowance is a deduction from taxable income, calculated as below.
- The allowance is fully recouped (reversed) on sale (i.e. the total allowances claimed in prior years are added back to taxable income in the year of sale).
- In order to claim the allowance, the owner must be using the property in the course of trade (i.e. renting it out, or using it for business purposes). No allowance may be claimed if the owner is occupying the property as a residence.
The tax allowance is calculated as follows:
- In the case of a newly built property, the allowance is based on 55% of the purchase price.
- 20% thereof (i.e. 20% of the 55%, being 11% of the purchase price) is claimed in Year 1.
- The remaining 80% is claimed evenly over the next 10 years (an effective 4.4% of the purchase price per annum).
Further tax notes:
The allowance is not automatically ring-fenced, and may create a tax loss situation for the investor / owner. This tax loss can be deducted from other types of taxable income. This loss may become ring-fenced in terms of the SARS rules on the subject (losses in 3 out of 5 years etc.).
LET’S TALK TAX AREA PROPERTY PRICE GROWTH
LET’S TALK POTENTIAL
LET’S TALK COMPARATIVES
FOR FURTHER UDZ TAX ADVICE PLEASE CALL OR EMAIL:
Leia van der Horst | Tax manager – firstname.lastname@example.org
Nici Martin | Senior Tax Consultant – email@example.com
LPH Chartered Accountants Inc.: Office Tel: 021 448 1360 • Website: www.lph.co.za
*Please note that the information above is merely a guideline and does not constitute a warranty. Please refer to the DISCLAIMER
The information and content contained on this website is designed and submitted by the developer and its marketing affiliates to provide general information regarding the development and its projects and services only. Whilst every effort has been made to ensure that the information provided is accurate, it does not constitute professional advice. The Developer and its affiliates makes no representations or warranties, implied or otherwise, that inter alia, the information or content available on or through this website will be accurate, reliable or correct; is free from errors or omissions or that the service will be uninterrupted, or that any information on the website will remain the same, available at any particular time, error free, or that defects will be corrected. The developer reserves the right to change the layout and/or size of the units, the development, the exclusive use areas as stipulated in the Offer to Purchase, the retail or other amenities, the finishes and features. The developer does not warrant that the UDZ incentive can be utilized and/or that all requirements, including that the cut-off date will be met. The terms of the Offer to Purchase will prevail and need to be studied by any prospective Purchaser. By entering the website you will be deemed to have agreed to this disclaimer and to have released and discharged the Developer and its affiliates rom all liability which may arise, as per the provisions of this disclaimer and indemnity.
The developer and its affiliates shall not be liable for any damage, loss or liability of whatsoever nature arising from the use or inability to use this website; or for the correctness of any information or content provided from and through this website. There is no warranty of any kind, express or implied, regarding the information and content supplied on this website or in respect of any aspect of the developer’s projects and/or services. Information, ideas and opinions expressed on this website should not be regarded as professional advice. Visitors are encouraged to consult the developer and/or its affiliates before taking any course of action related to information or opinions expressed on this website. The developer and its affiliates, its owners, directors, employees, officials, agents, suppliers or representatives shall not be liable for any direct or indirect, incidental, special, consequential or other damage of any kind whatsoever suffered or incurred by the visitor related to the visitor’s use of, or visitor’s inability to access or use, the content, information or the website or any functionality of the website or of any linked website, notwithstanding the fact that the developer / its affiliates may be expressly advised thereof.
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In the instance of any enquires, do not hesitate to contact the developer and/or its affiliates or transferring / bond attorneys – D Brand Attorneys (Drienie Brand) 0716747454, MHI Attorneys (Jurgens Tubb) 0824113980.