RSS

Monthly Archives: May 2015

Vat and Vat deregistration

VAT Deregistration

Should one deregister the property owning entity for VAT As a registered VAT vendor when you buy a R 2 000 000 property from a VAT vendor you are entitled to claim back the R 280 000 VAT that you paid.

The anomaly is that a R 2 000 000 property will probably only produce a taxable supply i.e. Rent of R 300 000 per annum, substantially under the R 1 000 000 compulsory threshold.

After three years of frustrated dealing with VAT returns and SARs you may want to deregister for VAT, a short answer, DON’T.

On deregistration VAT will be payable on the lower of cost or open market value, in this case you pay back R 280 000. NOTIONAL INPUT TAX CREDIT (NITC) With effect from 10 January 2012 a vendor purchaser is entitled, when acquiring a property from non-VAT vendor, to claim from SARS the transfer duty paid in respect of the purchase price of the property as a notional input tax credit calculated at 14/114. A R 2 000 000 property will attract transfer duty of R 65 000. Notional input tax will be calculated on the purchase consideration or market value e.g. R 2 000 000 x 14/114 = R 245 614,04.

The deduction is claimed in the VAT vendor’s return and documentary proof of payment of the purchase price and transfer duty and a copy of the Agreement of Purchase and Sale must be submitted with the return. The same caveat as above applies, on deregistration SARS will require the NITC to be repaid.

Article written by Wall & Smith Property Consultants And Valuers

 
Leave a comment

Posted by on 29/05/2015 in Content

 

Cape Town – Cape Town’s sectional title market is in sizzling form

Cape Town – Cape Town’s sectional title market is in sizzling form according to Seeff.

This sector is not only peaking with excessive demand and a shortage of stock, but prices are edging ever higher with the rates paid per square metre on the Atlantic Seaboard for example now exceeding those of top end freehold homes.

Chairman of the Seeff group, Samuel Seeff says that although sectional title property only comprise just under 23% (about 51 933 units) of the total number of title deeds registered for the Cape metro as a whole, it comprises 40% of all sales annually, such is the demand.

While, according to the latest Lightstone data, the number of units transacted across the metro for last year of 4 398 was only marginally more than in the preceding year, the total value of just over R7.253bn was 20% more.

Almost half of the value comes from the Atlantic Seaboard (about R2.6bn) and City Bowl/CBD (R1.1bn) followed by the Southern Suburbs at about R750 million and greater Blouberg and Parklands area at R670m.

The average price of sectional title property of R1.65m for the metro as a whole is not only 18% more than the R1.4m of 2013, but now closely rivals the freehold price of R1.67 million. Meanwhile the average sectional title price for the Johannesburg metro is at around R800 000, half of that of Cape Town.

The demand is being driven by a range of factors, says Seeff. Top of the list, a desirable location with areas close to transport and business nodes such as the CBD and Southern Suburbs and seaside locations such as the Atlantic Seaboard and Blouberg ranking amongst the most sought-after areas. Other high demand areas include Century City, the Tygervalley Waterfront and various hot spots across the northern suburbs.

On the Atlantic Seaboard and in the CBD, sectional title sales account for about two-thirds of annual sales according to Ian Slot, Seeff’s managing director for the areas.

The number of units sold in the CBD rose last year by 32% (221 versus 168) over the preceding year while the average sales price increased by 18% from R1.4m to R1.65m and by 19% from R3.6m to R4.3m across the Atlantic Seaboard.

Based on Propstats data, the average selling price of sectional title properties in the suburbs of the Atlantic Seaboard outranks the average price of most suburbs across the city.

In the CBD for example, it sits at around R1.9m while Green Point and Sea Point is at around R3.4m and Mouille Point at about R4.5m. In Bantry Bay, Fresnaye and Camps Bay the average ranges upwards of R6.5m to about R12m in Clifton.

Over the last year, apartments have sold for up to R32m at the V&A Waterfront and as much as R42.5 million on the Atlantic Seaboard (in Bantry Bay), both sold by Seeff. Clifton tops the list for the most expensive with apartments on the seaside of Victoria Road now easily selling for over R100 000/sqm.

At the V&A Waterfront Marina, apartments now sell for up to R67 475/sqm (incl. VAT) on the canals and R71 946/sqm on the FYB (Front Yacht Basin) based on the two most recent sales made by Seeff.

Nearby, at “The Water Club”, an exclusive ocean front development with a yacht bay located in Mouille Point, there is just about nothing up for sale and the less than a handful of units that sold last year reached prices of up to R84 609/sqm.

Another hot spot, the Southern Suburbs’ neighbourhoods of Rondebosch, Newlands, Claremont and Kenilworth too is seeing huge demand and critical stock shortages according to agents, Sean Guy and Belinda Keys. Units are consequently selling almost as soon as they come onto the market and attracting top prices.

Kenilworth apartments for example now sell for R1.2m on average, about R16 000 to R20 000/sqm. Rondebosch and Claremont units go for about R1.5m and upwards of R22 000/sqm to as much as R34 000/sqm. Newlands apartments sell for a similar rate per square metre, but a higher average price of around R2.5m.

Another hotspot is the greater Blouberg area, from Parklands and Table View to the seaside suburbs of Big Bay, West Beach and Bloubergrant. Here especially, there are severe stock shortages according to Wouter Pentz, licensee for the area.

Of the total value of sales recorded by Propstats for the last year of around R2.395bn, about a third relates to sectional title property. Century City now boasts an average selling price of just under R1.8m, about R16 000 to R24 000/sqm.

At Big Bay, that includes several exclusive seaside sectional title complexes including the sought-after Eden on the Bay, the average price is now around R1.5m, about R14 000 to R38 000/sqm.

Suburbs on the sea-side of the R27, most notably Bloubergrant with its mix of sea facing units now sell for an average of around R1.5m at about R24 000/sqm at the top end.

The more affordable Bloubergsands and Parklands still offer an average price of about R600 000, about R8 000 to R23 000/sqm. Table View boasts a similar rate per square metre, but a higher average of around R1m.

The agents agree that the massive demand is driven by two key factors, security and lifestyle. Busy lives and traffic congestion means that buyers are looking to save on maintenance and commuting. At the same time, they also want to live close to leisure hot spots and top beaches.

For this reason, the sectional title sector also has strong investment appeal with the demand for rental accommodation outstripping supply in the hot spots. Rental rates on the Atlantic Seaboard for example is edging ever higher with flats now easily fetching R25 000-R45 000 per month in Sea Point and Mouille Point and up to R60 000 to R80 000 in Clifton, Bantry Bay, Fresnaye and Camps Bay.

 
Leave a comment

Posted by on 20/05/2015 in Content

 

The South African property market continues to show positive growth trends

ooba barometer

Cape Town – The South African property market continues to show positive growth trends, despite the challenging local economic conditions and subdued business and consumer confidence, according to the latest statistics for April released by South African bond originator ooba.

“We were pleasantly surprised by a 10.3% year-on-year increase in the average purchase price to a high of R1 045 038 in April. This is the first time since May 2010 that the oobarometer has recorded double-digit year-on-year price growth,” said ooba CEO Rhys Dyer on Thursday.

READ: Pockets of SA prosperity, particularly in property

The average purchase price for first-time buyers also rose by 6.2% year-on-year to R788 953. Although first-time buyers continue to make up the majority of the home loan market, ooba’s April data indicates that the percentage of second-time buyers increased year-on-year by almost 3%, which accounts for the higher average purchase price.

ooba’s home loan lending statistics continue to point to positive signs in terms of home loan lender competition, evidenced by the higher approval rates and more competitive rate concessions recorded in April.

The average rate achieved by ooba in April 2015 of prime plus 0.27%, is well down on the average of prime plus 0.58% achieved in April 2014.

 
Leave a comment

Posted by on 18/05/2015 in Content

 

WHAT TO DO WHEN A FAMILY MEMBER DIES

Although we don’t know the ‘when’ and the ‘how’, death is a certain future event that nobody can escape, yet despite this fact many people are uncertain about what needs to be done when a friend or loved one dies.

The deceased’s body needs to be moved to a mortuary and a Death Notice needs to be issued by the doctor/pathologist. This form certifies the cause, date, time and place of death.

THE FUNERAL

When a person dies, the first priority is usually to arrange a funeral. If the deceased took out funeral cover during his lifetime, it is advisable to immediately start with the process by submitting the application forms to the funeral director/undertaker to verify the funeral policy details and arrange funds to cover the funeral expenses.

There is no law that requires a person to have a funeral service. It has however become a custom to have a ceremony to remember or celebrate the life that has now passed.

Some people choose to be buried whilst others prefer being cremated and people often indicate in a Will what type of funeral they prefer.

The knowledge and expertise of a funeral director/undertaker is recommended because they will be able to assist you in obtaining: the death notice; registering the death at Home Affairs and collecting the death certificate; preparing and dressing the deceased for the viewing or cremation; making a booking at the cemetery or crematorium; transporting the deceased etc.

If the deceased had no policy and you or the family members are not in a financial position to pay for the funeral, you can ask the funeral parlour to submit an invoice to the Executor of the estate for payment out of the funds in the estate. However, not many funeral parlours agree because some estates take long to wind up and the prospect that the estate could be insolvent.

REPORTING THE ESTATE

The next step after the funeral would be to find out if the deceased left a Will. A Will would be a written document made by the deceased and an indication by the deceased how his estate must be distributed after his death and who will inherit the assets after death.

The Will would usually be stored where the deceased kept his or her security documents, or kept it in safe custody with an attorney, bank or financial advisor. As soon as the Will is located, establish who has been appointed as executor in the Will. If it is a professional company like a bank, firm of attorneys or financial advisor, set up an appointment to meet with the nominated executor and then bring along all the documents that you can find that belonged to the deceased, in particular, the identity document of the deceased, death certificate, policy documents, bank statements, investment documents, share certificates and accounts found.

If you find more than one will, do not destroy the older versions, but hand over all to the master as the Master has the final say which will is valid or not. Usually the latest will revokes all previous wills, but it is up to the Master to make the decision.

The Administration of Estates Act 66/1965 describes the procedure to be followed in the administration of deceased estates. The documents to be submitted will depend on the value of the estate and the type of appointment.

The estate must be reported to the Master of the High Court within a period of 14 days after the death.  The Master requires the following documents to report the estate:

  1. Death Notice; 2. Original/certified copy of death certificate; 3. Original Will/Codicil or any document purporting to be a Will; 4. Next of Kin Affidavit (if the deceased left no valid will); 5. Inventory Form indicating all the assets of the deceased; 6. Acceptance of Trust as executor; 7. Nominations by heirs if no executor nominated in the Will; 8. Copy of ID of nominated executor; 9. Declaration of marriage by surviving spouse stating how deceased was married.

You can download these forms from the website of the Department of Justice and Constitutional Development on www.justice.gov.za/master/forms. Submit the forms by post or hand deliver it at the Masters Office, as these forms may not be faxed.

It is best advised that all documents be submitted in one pack to the Master as recently a new paperless and scanning system was introduced by the Master, which means that a full set of documents to report the estate can be processed much faster than documents submitted ‘bit-by bit”/ piecemeal.

Once the Master issues the formal Letters of Executorship, the appointed Executor can start with the task to wind up the estate and prepare an account, called the Liquidation and Distribution Account and file this account with the Master to set out the assets and liabilities of the deceased and the actual distribution of the estate of the deceased.

Since 5 December 2002, all magistrate’s courts are service points for the master where all estates with a value less than R50 000 can be reported. These services points have limited jurisdiction in respect of estates where: the deceased died intestate, and, the value of the estate doesn’t exceed R50 000, and the estate is not insolvent, and all the beneficiaries are majors or where there are beneficiaries that are minors, they are assisted by a legal guardian and the cash assets in the estate does not exceed R20 000.

In terms of s18 (3) as amended, if the value of an estate is less than R250 000, the Master of the High Court where the estate is reported shall issue directions as to the manner in which the estate ought to be dealt with.

On 24 November 2014, a notice was published in the Government Gazette which amended the value of estates to be dealt with in terms of section 18(3) and increased the amount from R150 000 to R250 000.

This amendment results in a lot of savings as these estates below R250 000 will no longer be considered full estates that require advertisements, drafting of the liquidation and distribution account etc. It is a much shorter and less formal way of winding up the estate and the Master will then issue Letters of Authority and appoint a representative, rather than an Executor to finalise the estate.

Where the value of the estate is more than R250 000, the Master will issue Letters of Executorship and the full process in terms of the Administration of Estates Act must be followed.

The letters of authority issued to the masters representative in terms of s18 (3), doesn’t authorize him/her to sell the immoveable property in the estate. If the representative needs to sell immoveable property, the master must give a further direction authorising the sale. However, if the purchase price including the value of the other assets, doesn’t exceed R250 000, the master may authorize the sale in terms of s18 (3) as part of his directions. If the immoveable property is being transferred to an heir, and not out of the estate, the s18 (3) endorsement will not be required.

TIP – notify your loved ones in advance where you keep your Will and update your will regularly.

Useful information Master of the High Court http://www.justice.gov.za/master/m_main.htm

Law Society: http://www.lssa.org.za/

Issued by: Oosthuizen & CO Meyer De Waal Attorneys – Prepared by Jaamonique Phillips and Meyer de Waal

For more information, contact:

Meyer De Waal on 021 461 0065

 
Leave a comment

Posted by on 18/05/2015 in Content