Taxable capital gains that should be included in taxable income = R 372 500 x 40% = R 149 000 Net capital gain = R 412 500 – R 40 000 (annual exclusion) = R 372 500 Primary residence exclusion will NOT apply. Portion of the capital gain attributable to the property’s use as a non-primary residence: Taxable capital gain = R 687 500 - R 2 000 000 Primary residence exclusion = R 0 Portion of the capital gain attributable to the property’s use as a primary residence: Let’s look at the same example again, but assume now that Paul lived in the house for five years and then relocated to a different city for three years, during which time he rented out his house. This means that you will need to pay capital gains tax on the remaining portion of the gain. The R 2 million primary residence exclusion is applied to the portion of the gain, which relates to the primary residence use only. The answer? The capital gain on the sale needs to be apportioned between primary residence use and non-primary residence use. it’s either your primary residence, or it’s never used for that purpose.īut what if you originally used it as your primary residence, but then moved out later and rented it to a tenant? Or, you first rented it out and then used it as your primary residence afterwards? This is the situation many confused taxpayers face, and they want to know how this affects the capital gains tax they need to pay when their property is sold. The above two examples are clear cut, so the capital gains tax calculation is quite simple i.e. Selling your primary residence, which you rent out for a period The capital gain calculation for the tax year of 2021 is: Paul lived in this house for the whole time that he owned it and therefore it would be regarded as his primary residence for tax purposes.Įxcluding the capital gain, Paul’s taxable income for 2021 is R 500 000. He spends R 400 000 renovating it, and then sells it for R 4 000 000 a few years later. proceeds minus base cost) that is less than R 2 million, the sale will not attract Capital Gains Tax. In this example, the R 2 million primary residence exclusion would apply. So, there’s no need to declare the details of your recent car sale or washing machine to the tax man! It's important to know that Capital Gains Tax doesn’t apply when you sell personal use assets. This means that the first R 2 million of your capital gain is exempt from tax, meaning that most taxpayers won’t actually need to pay Capital Gains Tax on the sale of their home. This may sound concerning, but the Tax Act does provide a R 2 million “ primary residence exclusion” for those taxpayers who sell their primary residence (i.e. So, selling your investment is not taxed at the same rate as money you earn from your salary, thank goodness!
#Parjx capital gain 2017 full#
This profit (or capital gain) is taxed at a lower rate than normal income – because only a portion of the capital gain (currently 40%) is included in taxable income, and not the full profit. Knowing which costs to take into account when working out the proceeds and base cost can be complicated! Look at our Capital Gains Tax Calculator for more detailed advice and to assist with your workings. When you buy and sell your home, there are lots of bills to pay like lawyer’s fees, estate agent’s commission and compliance certificates for example.
#Parjx capital gain 2017 plus#
The “base cost” is the purchase price plus any amounts spent on renovations or improvements, plus a few other smaller costs.
the proceeds/selling price is more than the “ base cost”. It comes about most often for taxpayers when their home or investment property is sold for a profit (gain) i.e. It forms part of normal income tax and is based on the sliding tax tables for individuals. Capital Gains Tax was introduced on 1 October 2001.
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