Budget 2021 brings some good news for the property market
Category Market Update
It was a relief that none of the expected tax increases materialised in Budget 2021.
Instead, Finance Minister, Tito Mboweni provided a small measure of tax relief to individuals by adjusting the personal income tax brackets by 5%. This means that everyone will save a little on their income tax especially low and middle-income earners. VAT also remains unchanged.
The budget was generally viewed as "positive" under some of the most challenging circumstances faced by the country. The minister made it clear that it is not an austerity budget, but is aimed at economic recovery, relief for households, vaccination and reforms in corporate tax.
A most welcome announcement is that a total of some R19.3bn is budgeted for vaccination along with additional health funding.
The minister also announced tax reforms including reducing the corporate tax rate to 27% with effect from the 1st of April 2022 as part of a move towards encouraging business growth.
Transfer duty also remains unchanged which means that buyers are still able to take advantage of the R1 million transfer duty exemption threshold.
Other taxes which affect the property market include Capital Gains Tax which remains unchanged at 18% for individuals and special trusts, 22.4% for companies and 36% for other trusts. Withholding tax on the sale of immovable property by a non-resident also remains unchanged.
The budget also focuses significantly on job creation with an overall allocation of nearly R100bn which includes an infrastructure budget as well as short-term job creation initiatives across various departments. The increases in the pensions and social grants are also welcome news.
As expected, consumers will face increased cost of living this year. This includes an increase in the fuel levy of 26c per litre along with various increases in the so-called "sin taxes" which relate to alcohol, tobacco, sugar and so on. A reminder too that households face a 15.63% electricity hike effective from the 1st of April.
The minister further noted that the SA economy is anticipated to rebound by 3.3% this year following a 7.2% contraction in 2020, thus averaging at 1.9% actual growth. By comparison, the global growth outlook is around 5.5% for the year spurred by the rapid vaccine roll-outs while China is expected to growth at 8.1%, India at 11.5% and the SADC region as a whole at 3.2%.
Home is our Story and property our passion. Given the five-decade low interest rate and positive bank lending climate, the current market is still packed with opportunities for buyers and sellers alike. Seeff is a proud market leader. If you would like to know more about opportunities in the market, don't delay, contact us today!
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Author: Gina Meintjes
