South Africa: Could it be home to your second home?
If you visited South Africa during the 2010 FIFA World Cup and fell in love with the country, you’re not alone! Through all the footage, photographs, blogs and articles during and after the sporting event, the world has had a glimpse of the natural beauty of the country; the hospitality of its people and the investment potential that exists.
But is it a good investment and what are the tax implications?
“There are many factors that make South Africa a good country to invest in” says Pieter Carstens from 1st Contact’s South African Tax division.
“The culture, climate and scenery alone are good reasons to have a place to call home in SA. The economy is also relatively stable and foreigners are actively encouraged to invest in South African property. In fact, there are very few restrictions on ownership and you don’t need a permanent or temporary residence permit to purchase property here.”
According to Carstens, if you’ve decided it’s time you invested in property in this sunny country, these are the 8 most important tax implications to take into account before making your decision.
- You will have register as a South African taxpayer if you buy property in the country;
- You would have to submit annual tax returns, as well as two provisional tax returns;
- You will be taxed on income generated in South Africa and not on your earnings elsewhere;
- Any losses incurred in South Africa would be carried forward until a profit is earned;
- When your property is sold, the lawyers will withhold 5% (subject to Annual Budget changes) of the selling price unless a tax directive is requested from the South African Revenue Service
- Capital Gains Tax will have to be paid on the sale of property;
- Foreigners may not claim the primary residence rebate;
- Should you sell you property and no longer have any income or assets in the country, you would then simply de-register with the South African Revenue Service.
To speak to a specialist on South African property tax, visit www.1stcontactsatax.com or call +27 21 657 2190.