JK in Brissie Posted August 13, 2015 Report Share Posted August 13, 2015 I suspect my circumstances may be similar to other bloggers so maybet here is some advice out there?Briefly:Bought (built) a house in 1995.Lived in it until 2004 then moved to Australia.Sold it in 2015.I am a taxpayer in Aus & SA and have been open with both Tax departments, getting tax credit offsets etc etc. Nothing to hide.So this year, my SA tax will include CGT on the sold property (as will my Aus. tax, with an offset credit)The issue: My SA tax advisor has applied the SARS formula and asserts that I will pay CGT on the growth from 1995. I feel it should be from 2004 when I moved out and rented the property. Makes quite a difference in this case and I think my advisor is incorrect.The SARS guideline documents do not seem to cover this scenario.Has anyone out there been in a similar situation?. Quote Link to comment Share on other sites More sharing options...
mlothian Posted August 14, 2015 Report Share Posted August 14, 2015 Hi thereThe Base Cost is not the amout paid in 1995 but should be determined as per the following as CGT only came into play 1 October 2001.3.4 Base costBroadly the determination of the base cost of an asset depends on whether it was acquired –• on or after 1 October 2001;• before 1 October 2001; or• by donation, for a consideration not measurable in money or from a connected person at a non-arm’s length price. See a link to a document on the sars website that would give you a better understanding of this matter. http://www.sars.gov.za/TaxTypes/CGT/Pages/default.aspx- The ABC of Capital Gains Tax for Individuals Please let me know how you go. Also bear in mind that I am able to assist you with the transfer of your proceeds should you require assistance. Warm Regards. Marlene Lothianmarlene.lothian@randgroup.biz Quote Link to comment Share on other sites More sharing options...
Gerhardk Posted August 14, 2015 Report Share Posted August 14, 2015 You are suggesting at the time of change in use (2004) a value must be attributed to the property but I do not know whether the CGT legislation caters for this or for apportionment. I have not had similar scenario but the gain should probably be apportioned since 2001, see article below. http://www.privateproperty.co.za/advice/property/articles/how-to-calculate-capital-gains-tax-on-house-rentals/431 Quote Link to comment Share on other sites More sharing options...
Brad76 Posted August 14, 2015 Report Share Posted August 14, 2015 Agree with the above - the property would need a value as at 01/10/2001 and both base cost and proceeds would need to be apportioned! Quote Link to comment Share on other sites More sharing options...
Hugo2 Posted August 15, 2015 Report Share Posted August 15, 2015 (edited) I suspect my circumstances may be similar to other bloggers so maybet here is some advice out there?Briefly:Bought (built) a house in 1995.Lived in it until 2004 then moved to Australia.Sold it in 2015.I am a taxpayer in Aus & SA and have been open with both Tax departments, getting tax credit offsets etc etc. Nothing to hide.So this year, my SA tax will include CGT on the sold property (as will my Aus. tax, with an offset credit)The issue: My SA tax advisor has applied the SARS formula and asserts that I will pay CGT on the growth from 1995. I feel it should be from 2004 when I moved out and rented the property. Makes quite a difference in this case and I think my advisor is incorrect.The SARS guideline documents do not seem to cover this scenario.Has anyone out there been in a similar situation?.This is a specialist topic. Feel free to refer your SA accountant to me. A Valuation will not always help you and its too late to obtain one now.Briefly: you pay tax on growth from 1 Oct 2001 to sale date. There may be withholding taxes. You are entitled to a proportional primary residence exemption for 3/14 years. The calculation is complex and for a self build the safest option is to deduct 20% base cost, to determine taxable gain in SA. It may appear to you, assuming the TAB method was used, that your accountant included pre 2001 gains in the calculation. Ask your accountant to contact me or inbox me. Www.taxmigration.com or www.bcbadvisory.comAgree with the above - the property would need a value as at 01/10/2001 and both base cost and proceeds would need to be apportioned!Neither base cost nor proceeds are aportioned. Base cost is stepped up based on either a valuation done at the time or based on a calculated step up. If you have proof of cost, calculate base cost step up based on time and adding apportioned pre Oct gain to the historical base cost. In short gain is opportioned not the building blocks. The second calculation option is to use 20% of proceeds where no supporting proof is available OR where the 20% results in the lowest tax.Hi thereThe Base Cost is not the amout paid in 1995 but should be determined as per the following as CGT only came into play 1 October 2001.3.4 Base costBroadly the determination of the base cost of an asset depends on whether it was acquired on or after 1 October 2001; before 1 October 2001; or by donation, for a consideration not measurable in money or from a connected person at a non-arms length price.See a link to a document on the sars website that would give you a better understanding of this matter.http://www.sars.gov.za/TaxTypes/CGT/Pages/default.aspx- The ABC of Capital Gains Tax for IndividualsPlease let me know how you go. Also bear in mind that I am able to assist you with the transfer of your proceeds should you require assistance.Warm Regards.Marlene Lothianmarlene.lothian@randgroup.bizMarlene, the part relevant to the quesion is on p3 or pdf page 6 Edited August 15, 2015 by Hugo2 2 Quote Link to comment Share on other sites More sharing options...
Naz Posted August 19, 2015 Report Share Posted August 19, 2015 Hi Hugo do you do tax returns ...? Quote Link to comment Share on other sites More sharing options...
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