| Capital gains tax is a tax levied on the profit | | | | Revenue Service. Your capital gain less the capital |
| made on the sales of any property sold. The tax | | | | loss gives you your total gain. So, any gain made |
| is levied on the difference between the amount | | | | after the first 10,000 is then taxed at 25% for a |
| the asset was sold minus the original cost of the | | | | primary residence only. On the other hand, a tax |
| property and the cost of any improvement made | | | | of 50% of the total gain will be exerted on a |
| on it. It was introduced to South Africa in October | | | | property that is not a primary residence These |
| 2001. | | | | regulations are applied yearly to the income tax |
| Who Pays it? | | | | return. |
| Everybody resident of the country must pay the | | | | Properties Exempted from the Capital Gains Tax |
| tax on all property sold irrespective of the | | | | Under the administration of the tax in South |
| property's location i.e. both properties inside and | | | | Africa, almost all assets are considered taxable. |
| outside South Africa are taxable. Furthermore, | | | | However, a few of them are exempted. An |
| non South African residents that have private | | | | example is a property that is being occupied by |
| assets or businesses in the country are liable to | | | | the owner. Other conditions need to be met |
| be taxed. | | | | though. For example, the property's worth should |
| The Details | | | | not be more than R1, 000,000 and it should not |
| Each year while you are filing the year's income | | | | have more than 2 hectares of adjacent land to |
| tax return, the capital gains on all the properties | | | | the residence. Other assets exempted are |
| sold including your primary residence will be filed | | | | personal belongings, earnings from gambling, |
| as part of the taxable income. The capital gain is | | | | private automobiles, retirement benefits and |
| calculated by subtracting the base cost of the | | | | annuities etc. |
| property in question from the property's sale | | | | How to Calculate Your Assets |
| price. It should be noted that the property's base | | | | The base cost of your property can be |
| cost is not just the original price that you paid to | | | | computed using two methods. These are the |
| get it. It also includes all other costs that you may | | | | valuation and time apportionment methods. For |
| have incurred on it such as improvement costs, | | | | the valuation method, the property's value as at |
| stamp duty, charges paid to your attorney or | | | | October 2001 must be known. For the second |
| estate agent etc. | | | | method, the capital gain on the property is |
| The South African Capital Gains Tax, CGT, has a | | | | calculated back in time from the time it was |
| few additional rules that apply to the | | | | initially purchased to the time it was sold. After |
| administration of the tax. For example, the first | | | | this, the gain that occurs after October 2001 is |
| 10,000 rand of your capital gain is excluded from | | | | then factored out. This second method is a little |
| your taxable amount if you are considered as an | | | | bit more complicated to understand and compute. |
| individual for tax purposes by the South African | | | | |