SARS Loves Property

From time gone by, one of the most dreaded people in society, has been the tax man. In biblical times, they were more despised than ladies of ill repute, and even oppressive armies.

Over centuries, land barons have been taxing land tenancy and ownership, a custom continued today. All land / property  owners are taxed on their property portfolios and it goes without saying, every homeowner in the country pays their local council. The city taxes the homeowner for the funds to provide services.

But the time the Honourable SARS rubs his hands with glee the  most, is when a property is sold and transferred to a new owner.

For starters, the seller will pay the agent a commission for selling the property. Most of the estate agencies are vat registered. So the commission will attract vat. On a R2 million Rand property, the agent could (and should!) charge 7.5% plus vat. Kaching !!! SARS collects R21,000.

In order to get the property transferred into their name, the purchaser must pay transfer duty.
Transfer duty, paid to the intrepid government's coffers ...R77,000.

The Deeds office must also get paid for the work they do R850. (Surely the transfer duty could cover this? They are a Government department and the government is not very good at ringfencing income)

The attorneys will charge for their services, (registering a property is something you cannot do yourself) and we don't begrudge them their fee. Vat on attorneys fees...R2,695.

Our unsuspecting buyer, having paid a bucket of money to the state, breathes a sigh of relief, until the bank man comes calling.

Our unsuspecting buyer, applies to, and is successful at raising a home loan at the bank.

Registering the bond at the Deeds Office (assuming a bond of R1.5m).. R850. And of course, our intrepid attorney has to charge for the service, and the fee attracts vat.... R2096.

So that provides a summary of some of the ways the State coffers are fed on a daily basis, as properties are bought and sold........so that's R105,000 on this relatively small property transaction

What's missing?

CAPITAL GAINS TAX..........A headache for another day.