Thursday, June 12, 2014
Sunday, May 25, 2014
Monday, March 31, 2014
Saturday, November 30, 2013
Tuesday, July 9, 2013
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.
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.
Friday, May 23, 2008
Real Estate Professional or Tour Guide?
Everyone has their own , or has heard, horror stories about buying or selling a property.
This is to help real estate agents take a careful look at their chosen profession and analyse their own standards.
South Africa, the USA and the UK are currently experiencing a "buyers' market" in real estate. Take a moment and think about how you treat a buyer.
If you were a financial adviser, and someone contacted you with Xmillion or more to invest, would you deal with it on the phone, or would you make a face-to-face appointment to discuss their needs and give yourself the opportunity to be the successful agent. Phone an investment consultant and see. But phone an estate agent with X millions to invest and at best an appointment will be made to drag you on a guided tour of the properties they have listed. If they have nothing that meets your requirements, they adopt a shotgun approach: show you anything they have and hope that one of them will stick. As a buyer I was shown countless properties over a 12 month period, many of which were no where near my requests and some not even in the suburb I specified!
The computer and office automation industries, among others, have for many years focused on need satisfaction selling. The basis of this is that you as a salesperson need to ask many questions to ensure that you have a very clear picture of what the buyer is looking for. Only then can you provide your solution with the correct product, and close the deal.
Subsequent research by Xerox Corporation in the 1980's showed very clearly that sales people that asked the highest number of focused questions, achieved the highest results. Almost unexpectedly, the buyers interviewed in over 10,000 interviews throughout the US and Canada, said that they trusted these sales people more. In a market where you are dealing with the biggest investment a person makes in their life, trust becomes a very important factor.
Needs: What does the customer need in terms of a property? Three bedrooms two bathrooms, garaging for two cars and a boat, family room for the teenagres and a flat for Granny as she is going to be funding a large portion of the transaction! Price / affordability !!!!! These are the non-negotiable aspects of their requirements.
Criteria: Suburb, view, shopping malls, schools, transport, friends in the 'hood etc.
Deals are only closed on the needs agreed to by the buyer and not the "nice" aspects of the property you try to push down their throats!
So, how do you treat your buyers? If you made the right impression, asked the right questions and provided the benefits of dealing with you and your company, would it then not be possible to conclude a buyer's mandate? (Buyers' Representation Agreement)
South Africa is hosting the 2010 Soccer World Cup. An offshoot of the tournament will be many foreign visitors who may well be interested in purchasing property. It will be a first time in South Africa for many of them and with the currency exchange rate in their favour, property becomes very attractive. The 'tour guide' approach is best avoided with foreign businessmen.
http://www.freewebs.com/dashinginc
Want to know more? E-mail me on dashinginc@mweb.co.za.
This is to help real estate agents take a careful look at their chosen profession and analyse their own standards.
South Africa, the USA and the UK are currently experiencing a "buyers' market" in real estate. Take a moment and think about how you treat a buyer.
If you were a financial adviser, and someone contacted you with Xmillion or more to invest, would you deal with it on the phone, or would you make a face-to-face appointment to discuss their needs and give yourself the opportunity to be the successful agent. Phone an investment consultant and see. But phone an estate agent with X millions to invest and at best an appointment will be made to drag you on a guided tour of the properties they have listed. If they have nothing that meets your requirements, they adopt a shotgun approach: show you anything they have and hope that one of them will stick. As a buyer I was shown countless properties over a 12 month period, many of which were no where near my requests and some not even in the suburb I specified!
The computer and office automation industries, among others, have for many years focused on need satisfaction selling. The basis of this is that you as a salesperson need to ask many questions to ensure that you have a very clear picture of what the buyer is looking for. Only then can you provide your solution with the correct product, and close the deal.
Subsequent research by Xerox Corporation in the 1980's showed very clearly that sales people that asked the highest number of focused questions, achieved the highest results. Almost unexpectedly, the buyers interviewed in over 10,000 interviews throughout the US and Canada, said that they trusted these sales people more. In a market where you are dealing with the biggest investment a person makes in their life, trust becomes a very important factor.
Needs: What does the customer need in terms of a property? Three bedrooms two bathrooms, garaging for two cars and a boat, family room for the teenagres and a flat for Granny as she is going to be funding a large portion of the transaction! Price / affordability !!!!! These are the non-negotiable aspects of their requirements.
Criteria: Suburb, view, shopping malls, schools, transport, friends in the 'hood etc.
Deals are only closed on the needs agreed to by the buyer and not the "nice" aspects of the property you try to push down their throats!
So, how do you treat your buyers? If you made the right impression, asked the right questions and provided the benefits of dealing with you and your company, would it then not be possible to conclude a buyer's mandate? (Buyers' Representation Agreement)
South Africa is hosting the 2010 Soccer World Cup. An offshoot of the tournament will be many foreign visitors who may well be interested in purchasing property. It will be a first time in South Africa for many of them and with the currency exchange rate in their favour, property becomes very attractive. The 'tour guide' approach is best avoided with foreign businessmen.
http://www.freewebs.com/dashinginc
Want to know more? E-mail me on dashinginc@mweb.co.za.
Wednesday, May 21, 2008
The Small Business Minefield
So,how did you get here?
Ten years ago I was retrenched from my nice ,comfortable, well paid job. I decided to start my own business- be the master of my own destiny, my own boss. I had many years in sales, marketing, diplomas from a top graduate university: all I needed to succeed.. Little did I know, and was never taught at university, that I was about to walk through a minefield. There is so much we the small business owners are not warned about. You won't find it in any of the books, so here are some of the traps I and many of my friends fell into ( or stood on: some went BANG!) So, if you choose to be a budding entrepreneur, here are some real-life stories that hopefully will help you survive. They may sound simplistic, but they are real. Never believe,"I would never let that happen to me!"
Robert's Minefield: Robert walked into a minefield after his second year in business. As is the case with start-ups, the first year or two see exponential growth. Life is exciting, your energy is boundless and best of all, money is coming in. Robert decided that this shop was doing well, why not open another? Soon the plans were in place, the premises leased and the exciting cycle started again. The working capital was of course supplied from the original operation which soon sapped the profits. As his time, enthusiasm and expertise were diluted, both businesses suffered: Robert suffered! MINEFIELD! DON'T GET TOO BIG TOO QUICKLY.
Tom's Minefield: Tom planned his business venture very carefully. As opposed to some, he bought an existing business, printing T-shirts. His minefield came from nothing HE did wrong. His one and only supplier had a fire and could not supply for his Christmas orders. BANG! By the end of January, the business closed. NEVER RELY ON ONLY ONE OR TWO SUPPLIERS!
Big Business is not the friend of small business: It is a goal of every small business owner to dream and chase that big order that will set the business rolling. The sale that will pay off all the credit cards, the children's' school fees and buy the wife that ring she has always wanted.
Craig's Minefield: Craig was beside himself with excitement! He had secured that sale that was going to change his life. He ordered the raw materials, the staff worked through the night, ( two nights in fact) and the order was delivered on time! The customer was presented the invoice. Cash On Delivery was the arrangement. The invoice was duly dispatched to head office.....then ....nothing. It had disappeared into the bowels of a paper eating monolith, 1000 miles away! After a week of detective work Craig finally got hold of the financial director. The answer was not what he wanted to hear," We have decided to pay you 60 days" BANG! The suppliers of the raw materials were not happy and cut his supply. Casual staff needed to be paid, he had expended all his resources to finance this one "dream" deal.Big business need no favours. If they do not want to accept your terms (in this case it should have been 50% with order), LET IT GO!
These are just a few of the mines in the field that we as small business owners have faced. More will follow in later blogs. It is essential that small business owners keep abreast of new ideas and developments in the SME world. I strongly suggest that all SME owners read, study and call on experts in the field.
Ten years ago I was retrenched from my nice ,comfortable, well paid job. I decided to start my own business- be the master of my own destiny, my own boss. I had many years in sales, marketing, diplomas from a top graduate university: all I needed to succeed.. Little did I know, and was never taught at university, that I was about to walk through a minefield. There is so much we the small business owners are not warned about. You won't find it in any of the books, so here are some of the traps I and many of my friends fell into ( or stood on: some went BANG!) So, if you choose to be a budding entrepreneur, here are some real-life stories that hopefully will help you survive. They may sound simplistic, but they are real. Never believe,"I would never let that happen to me!"
Robert's Minefield: Robert walked into a minefield after his second year in business. As is the case with start-ups, the first year or two see exponential growth. Life is exciting, your energy is boundless and best of all, money is coming in. Robert decided that this shop was doing well, why not open another? Soon the plans were in place, the premises leased and the exciting cycle started again. The working capital was of course supplied from the original operation which soon sapped the profits. As his time, enthusiasm and expertise were diluted, both businesses suffered: Robert suffered! MINEFIELD! DON'T GET TOO BIG TOO QUICKLY.
Tom's Minefield: Tom planned his business venture very carefully. As opposed to some, he bought an existing business, printing T-shirts. His minefield came from nothing HE did wrong. His one and only supplier had a fire and could not supply for his Christmas orders. BANG! By the end of January, the business closed. NEVER RELY ON ONLY ONE OR TWO SUPPLIERS!
Big Business is not the friend of small business: It is a goal of every small business owner to dream and chase that big order that will set the business rolling. The sale that will pay off all the credit cards, the children's' school fees and buy the wife that ring she has always wanted.
Craig's Minefield: Craig was beside himself with excitement! He had secured that sale that was going to change his life. He ordered the raw materials, the staff worked through the night, ( two nights in fact) and the order was delivered on time! The customer was presented the invoice. Cash On Delivery was the arrangement. The invoice was duly dispatched to head office.....then ....nothing. It had disappeared into the bowels of a paper eating monolith, 1000 miles away! After a week of detective work Craig finally got hold of the financial director. The answer was not what he wanted to hear," We have decided to pay you 60 days" BANG! The suppliers of the raw materials were not happy and cut his supply. Casual staff needed to be paid, he had expended all his resources to finance this one "dream" deal.Big business need no favours. If they do not want to accept your terms (in this case it should have been 50% with order), LET IT GO!
These are just a few of the mines in the field that we as small business owners have faced. More will follow in later blogs. It is essential that small business owners keep abreast of new ideas and developments in the SME world. I strongly suggest that all SME owners read, study and call on experts in the field.
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