Transfer duty: housing recovery helps boost revenue
03 March 2014
Posted by: Author: Joan Muller
Author: Joan Muller
The income that government earns from transfer duties surged by 28% in the 2013/2014 tax year, which suggests that the housing market is now well on its way to a recovery following a five-year slump.Last year’s transfer duty revenue of an estimated R5,47bn, up from R4,27bn in 2012/2013, is the highest level reached since the housing boom days of 2005-2008 and some 43% up from the 10-year low of R3,83bn reached in 2011/2012.
However, last year’s R5,47bn level is still some way off the R8,51bn that treasury collected from property sales at the peak of the market in 2005/2006. The good news for home owners and investors is that finance minister Pravin Gordhan expects a continued recovery in transfer revenues of around 9%-10%/year for the next three years, with transfer duty collections reaching R7,25bn by 2016/2017. However, government has not provided any transfer duty relief to home buyers this year, keeping the tax-exempt threshold at R600000. The last time an adjustment was made to transfer duties was in 2011, when the threshold was raised from R500000 to R600000.
There is also no further relief in the form of the primary residence exclusion for capital gains tax on the sale of luxury homes. Two years ago it was raised from R1,5m to R2m. Though it was not entirely unexpected, industry players voiced disappointment about the absence of further tax relief for home buyers, owners or sellers in this year’s budget. "Such relief — either by way of a higher transfer duty threshold or by way of a tax rebate for the interest paid on home loans — would have helped to alleviate the current decline in housing affordability, given rising interest rates,” says BetterBond CEO Shaun Rademeyer.
This article first appeared on financialmail.co.za.