How Does The 2021 Budget News Influence The SA Property Market?

The Minister of Finance, Mr Tito Mboweni, yesterday delivered the National Treasury's budget for 2021/2022. The property market is always affected by the overall performance of the economy and the budget speech will most definitely be influential on how the local real estate market will be doing over the next year.

The following stands out for the property market:

• Transfer duty, including the R1 million exemption threshold remains unchanged
• VAT remains unchanged at 15%
• Capital Gains Tax effective rates remain unchanged:

           Individuals and special trusts - 18%
           Companies - 22.4%
           Other trusts - 36%

• Estate Duty remains unchanged at 20% on the first R30 million, and 25% for the amount above R30 million.
• Withholding tax remains unchanged at 7,5%, 10% and 15% on the sale of immovable property by a non-resident.

Other noticeable changes which have an indirect bearing on the property market and the property buyers disposable income levels, were:

• Income tax thresholds have increased to:

           Taxable Income (R)         Rate of Tax (R)
           1 - 216 200                     18% of taxable income
           216 201 - 337 800          38 916 + 26% of taxable income above 216 200
           337 801 - 467 500          70 532 + 31% of taxable income above 337 800
           467 501 - 613 600          110 739 + 36% of taxable income above 467 500
           613 601 - 782 200          163 335 + 39% of taxable income above 613 600
           782 201 - 1 656 600       229 089 + 41% of taxable income above 782 200
           1 656 601 and above      587 593 + 45% of taxable income above 1 656 600 

These increases effectively has eliminated "bracket creep" through above-inflationary increases in tax brackets, effectively decreasing personal income tax rates which will help lower- to middle-income earners by hopefully providing access to greater disposable income.

The general fuel levy increases by 15 cents per litre, and the road accident fund levy increases by 11 cents per litre on 7 April 2021, will affect potential home buyers cost of living and eat into household budgets and will offset some of the personal tax savings provided.