The Investor needs to own at least 5 residential properties. This does not have to be purchased at the same time, although only once the 5th property has been acquired, the Tax Incentive will come into play. All 5 these units need to be used for rental purpose, this means that the owner and his family cannot stay in these units themselves All units must be in South Africa, as this incentive will only apply to a South African Tax Payer These properties need to be new and unused, which means that the owner (or rental agent of the owner) must be the first person to place a tenant in these units. SARS requires one person with one tax number to be the owner of these 5 properties. In the case that you are married in community of property, you and your spouse will each have their own tax number and you will not qualify for this incentive. There are two different types of properties that SARS will look at in two different ways. The Investor can decide which option will fit their portfolio the best in terms of the Tax Incentive. Sectional Title – here you don’t own the land that the property is build upon and you share your walls with your neighbours. Everything that is inside of your walls of your Sectional Title unit is yours. This mainly pertains but is not limited to flats, or apartments as some may call them. Some row-houses or duplex properties might also be part of this type of property. When you own one of these Sectional Title properties, SARS offers you 55% back on the Purchase Price of the property, claimed back over a period of 20 years. Full Title – this is where you own the building AND the land. In this instance, Tax Payers may only claim on the building portion of the property as the land that its build on, does not depreciate. Therefor it could add up to 80% of the building cost, depending on the cost of the land, claimed back over a period of 20 years.
