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25 Feb 2015

While the tax proposals regime announced in the 2015 National Budget signalled difficult times ahead, Finance Minister Nhlanhla Nene also announced new tax breaks that will ease the burden on the already strained working and middle class income earners.

While the super-rich will pay more on property transfer pricing, the Minister delivered good news to citizens who purchase property worth less than R750 000.
transfer duty 845x321 

What is it?
Transfer Duty is a tax levied on the value of any property acquired by any person by way of a transaction or in any other way. For the purpose of Transfer Duty, property means land and fixtures and includes real rights in land, rights to minerals, a share or interest in a “residential property company” or a share in a share-block company. All Conveyancers are requested to register with SARS. See more on the registration of Conveyancers here.

These are the Transfer Duty rates applied to properties acquired on or after 1 March 2017, and apply to all persons (including Companies, Close Corporations and Trusts):


​VALUE OF PROPERTY
(Rand)

RATE
0 – 900 000                                                                 0%
900 001 – 1 250 000                                                   3% of the value above R900 000
1 250 001 – 1 750 000 ​                                               R10 500 + 6% of the value above R 1 250 000
1 750 001 – 2 250 000                                                R40 500 + 8% of the value above R 1 750 000
2 250 001 – 10 000 000                                              R80 500 +11% of the value above R2 250 000
10 000 001 and above                                                R933 000 + 13% of the value above R10 000 000

- SAnews.gov.za

What to know when buying sectional title

The benefits of living in a sectional title development are numerous. From being part of a safe, secure community to having access to gardens and recreational facilities that are maintained for you.

However, she says these benefits come at a cost. Having to pay monthly levies for the convenience, while abiding by scheme rules, and not being able to make changes to your home, without trustee permission for example, may prove to be too much for some.

In terms of the Act, sectional title developments are legal entities that must be managed by a body corporate.” The body corporate oversees the management of the development and for this they charge levies, which must be taken into consideration when calculating the affordability of the property you wish to purchase.

Bodies corporate are responsible for ensuring that the financial, physical and administrative needs of the development are met.

They are made up of the owners in the development who elect trustees at their Annual General Meetings to manage the day-to-day operations. They also set scheme rules in place and ensure that residents adhere to them.

Double says before buying a property in a sectional title development, buyers must find out as much as they can about the development, or it could be a decision that they later regret.

First off, buyers must be clear on which section of the scheme they are buying, which common sections are shared with their neighbours, and whether they have any areas which are exclusively theirs.

It is important to know exactly what areas and costs you are responsible for and what falls under the responsibility of the body corporate. This can be a tricky area in some schemes, and being knowledgeable can help you avoid disputes and unnecessary expenses.

Buyers must have a clear understanding of whether they will be paying levies, to just a body corporate or to a Homeowners’ Association as well.

The body corporate of the apartment block oversees the management of the block, and they too will charge a levy. These levy expenses are important to consider when calculating the affordability of the property, together with bond costs, rates, homeowners insurance and water and electricity costs.

She says prospective buyers should also place the Homeowners’ Association, body corporate or managing agent under scrutiny.

“Asking for a copy of the scheme’s financial statement is a great way of seeing whether levies are being paid, whether the scheme is putting the money to good use, and whether there is a healthy reserve of levies set aside for future projects and maintenance.”

If the complex you want to buy into is looking neglected and shabby, it could be a sign that not all is well with the management team. Besides the obvious fact that you will be investing in a poorly maintained complex, the resale value of your home may be seriously affected in future years.

A large part of living in a sectional title is abiding by the scheme rules which are set in place to ensure acceptable behaviour by all the owners.

Prospective new owners must obtain a copy of the conduct rules and see how it will impact them. Buying a home in a non-pet friendly complex when you own three dogs, for example, can only lead to problems down the line.

Another issue that crops up often is that of parking. If you have a family with three adult drivers each owning a vehicle, but are only allocated one parking and one visitor parking, in terms of the scheme rules, this will become a point of great frustration.

Buyers need to be 100% sure of what they want, and be sure of whether they are ready to embrace both the pros and cons of being an owner in a sectional title scheme.

Willow Brook

Who pays for the complexes upkeep

As opposed to conventional full title property where you would pay rates and taxes, insurance, upkeep, electricity and water, in sectional title, many of these costs are funded from a levy fund which all owners pay into monthly.