Finance Minister Tito Mboweni has provided some relief to prospective buyers looking at investing in South Africa’s property market.
In his Budget Speech delivered on Wednesday afternoon, Mboweni adjusted the threshold for transfer duties, with zero-duty payable to properties valued at under R1 million.
The brackets to calculate transfer duties on the sale of property was last adjusted in 2017 at R900 000.
Growth Head at FNB Home Finance Buyisile Maseko says this move will positively impact prospective buyers and help encourage home ownership in South Africa.
“With the steady increase in property prices over the past 24 months, this is a welcome relief to individuals wanting to enter the property market. The race threshold for transfer duties is positive news as it provides some relief for first time owners,” says Maseko.
In the audio below, Maseko hails Mboweni’s stance on transfer duties:
Move seen as positive incentive
Chief Executive Officer of Pam Golding Property Group Dr Andrew Golding has lauded the Finance Minister’s efforts in making it easier for first time home buyers to now afford housing.
In a statement, Golding described the increase in transfer duty threshold as a ‘positive incentive’ for both the property market and government.
“It will help stimulate property transactions in this price band, increasing volumes and creating a ripple effect across the market in general – which will in turn benefit government income generation,” says Golding.
In the video below, CEO and Founder of SA Property Investors Network Andrew Walker gives guidelines on how on the property market functions and how it grows:
Reprieve on personal taxes widely welcomed
In addition to efforts on expanding the property market, Mboweni highlighted tax proposals for the 2020 Budget that aim to aid economic growth recovery, with some relief on the personal income tax.
— National Treasury (@TreasuryRSA) February 26, 2020
He added that that the current economic climate makes it difficult to burden citizens with further tax increases.
Some personal tax relief measures include:
- A R3 400 yearly tax relief for those earning R460 000 per annum
- A tax reduction of R1 500 per year for those earning R265 000 per annum
Head of Investment Research at FNB Chantal Marx described these tax relief measures and Mboweni’s speech as a delicate balance between bond and equity friendly.
“Equity friendly is usually when expenditures are up and taxes are down, which would mean that people have more money in their pockets and this is usually good for markets, particularly for the JSE and South African Inc Stocks. A bond-friendly budget usually has a decline in expenditure and higher taxes, which means more money is available to bond holders and other people who are owed money by government from a broader debt perspective.”
“What happened here is that we saw the expenditure being cut to being a more bond friendly one because there is more money available in the fiscus to pay debt holders but you also had a stay of execution on tax increases,” adds Marx.