Section 13sex Tax Incentive

An important tool for property investors

Claim back up to 55% of your properties purchase price back.

Clued up investors reap the benefits. Start today!

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New property developments and the current economic climate have also provided great opportunities for property investors to grow their portfolio and take advantage of SARS’ tax write-offs.

This section in the tax law was written to help long term property investors stay invested in the industry, and get rewarded for their investment. Remember the tax incentive and write off is over a 20 year period.

How do I qualify?

Own / purchase a minimum of 5 properties

Owned by one individual / entity (with a single tax number)

Purchase properties from a developer

Purchased as a buy-to-let property

Properties must be purchased within South Africa

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Example

  • You buy five R1 million properties.

  • Your property value will be R5 million. 

  • SARS will allow a 55% write off against the acquisition price as a deduction against your taxable income.  

  • This equates to a R2.75 million tax deduction to reduce your tax liability, over 20 years.

  • This equates to a tax allowance (for 20 years) of R137500 annually, taxed at 45% equals R61875 a year (or effectively R5156 a month).

Some things to consider:

  • The government is out to do two things: stimulate the economy and make sure your money stays locked in. This is done by giving you the tax break – but if you sell the property within the 20 years is over, the deductions claimed under this section (from the purchase date to the date of sale) must be recouped and added to the taxable income of the investor in that year.

  • If the taxpayer has claimed the same property under another section of the act, no allowance is permitted.

  • The tax deduction is limited to the lesser amount of the actual cost, this preventing This is to prevent unethical taxpayers from inflating the price in order to claim higher deductions. 

  • Properties must have been purchased post 2008.

There are many ways to minimise tax within your property portfolio, but no tax incentive comes close to the impact Section 13sex of the income tax act can have.

Our team of experts are here to help you understanding your options and provide you with the choice of various apartments in different developments built with the buy-to-let purchaser in mind, as well as with current and future market demand as a priority.

Chat to our property strategists today to help you create a property portfolio that will serve you and your loved ones well into the future.

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