Bond repayments will commence once the property has been transferred to your name and the bank has settled the payment to the seller.

Bond costs are payable at the time that the bond registers, once the development is complete.

There is no transfer duty payable but there are transfer fees (attorney costs).

The seller is registered for VAT so there will be no transfer duty but only transfer costs payable.

To calculate the transfer costs you can click on the below link: 

https://www.ooba.co.za/home-loan/transfer-cost-calculator/

NB: Please select yes when it asks if the seller is registered for VAT.

Example:

On a purchase price of R1,214 million the transfer costs will be R29 303*

*Please note these are subject to change

They cover the costs of security, cleaning & upkeep of the common areas, maintenance of the building, building insurance and all running costs and management costs and insurance of the building.

Monthly rates are based on the value of the property and are calculated based on the value of the property and then multiplied by 0.006344 to get your yearly rates. Divide this by 12 to get your monthly rates.

Example:

(R1,214 million property)

R1,214,000 x 0.006344 = R7,701 per annum

This equates to R641 per month

The contract price is the price the client will pay for the property. You must be aware that there is occupational interest due from the date you take occupation until you take ownership (transfer takes place).

The other costs applicable are detailed above and include monthly rates and levies. Bond costs will be payable prior to registration of your bond once you take transfer of your unit. Transfer costs at this point will also be applicable but these costs are largely offset by the interest that you earn on your deposit during the construction period.

After the completion of the development, the transfer process will commence. Occupation will be given as soon as an occupation certificate is granted. You will be able to occupy or rent out your apartment from the date of occupation.

Investors have access to powerful tax incentives, including the popular Section 13sex of the Income Tax Act No 58 of 1962. This scheme enables any taxpayer who owns five or more new, residential rental units (do not all have to be from the same development), to claim up to 55% of the purchase price as a tax deduction.

Example:

• Purchase five units at a total purchase price of R6 797 000
• Minus the launch discount = R250 000 (R50 000 per unit, if purchased on launch)
• Final purchase price = R6 547 000
• Deemed purchase price = R3 600 850 (55% of final purchase price)
• 5% of the deemed price may be used as a tax deduction per year

This works out to a tax deduction (tax write-off) of R180 042 per year for 20 years.

Total tax write-off = R3 600 850 (over 20 years).

•   The taxpayer must own at least 5 residential units. The deal kicks in once the buyer takes ownership of their 5th new unit. A residential unit refers to a building or self-contained apartment, mainly used for residential accommodation with the exclusion of structures used for business purposes, for example, hotels.
• All units must be situated in South Africa.
• Residential units must have been purchased new and unused. (For example, buyers of flats that had previously been occupied would not qualify for this incentive.)
• The units must be used solely for the purpose of trade (i.e. residential letting). This prevents housing claims for personal use.
• Please consult your tax advisor for further clarification and information.

1. Cape Town sees an average annual capital growth of 5-7%, so your property value is growing at roughly 5-7% pa but you are only required to put down 10% of the development value.
2. This means you are getting growth on the full purchase price of the property and only have to put down a fraction of the price.
3. Your tenant is largely paying off your investment property & bond for you.
4. Your rental income increases every year but bond repayments generally stay the same and in relation to yearly salary and incomes inflating, the bond repayments become relatively cheaper every year.
5. There is high demand for secure luxury property in Cape Town’s City Centre and Atlantic Seaboard, resulting in a secure long-term investment.
6. The longer it takes to enter the property market the harder it becomes.
7. Property investment is likely to create long-term sustainable wealth and an ever-increasing annuity income.