Page 9 - Nexia SAB&T Property & Tax Guide 2022

Allowable capital expenditure includes the following:
◆ The cost of acquiring, creating or improving the asset (excluding any borrowing costs).
◆ The cost for valuation of the property for CGT purposes.
◆ Cost incurred in respect of disposal of the property (including sales commission,
advertising, valuation costs, accounting and legal costs, removal cost etc.).
A capital gain or loss is calculated separately in respect of each asset disposed. Once deter-
mined, gains or losses are combined for that year of assessment and if it is:
◆ An assessed capital loss, it is carried forward to the following year; or
◆ A net capital gain, it is multiplied by the inclusion rate and included in taxable income.
◆ Annual exclusion of R40 000 capital gain or capital loss is granted to individuals and
special trusts.
◆ Instead of the annual exclusion, the exclusion granted to individuals is R300 000 for
the year of death.
The inclusion rates are as follows:
PERSON 2021 2022 2023
Natural person and special trust 40% 40% 40%
Company 80% 80% 80%
Trust 80% 80% 80%

PRIMARY RESIDENCE EXCLUSION
When a primary residence is disposed of capital gains up to R2 million is exempt from CGT.
The following are the main provisions relating to primary residences:
◆ The exemption is applicable to natural persons and special trusts.
◆ Only one residence at a time may be a primary residence of a person.
◆ The exemption is applicable if a person merely has an interest in the residence. As a
result a share in a share block company and a usufruct may qualify (subject to further
provisions).
◆ If the residence is held by more than one person as a primary residence an
apportionment of the R2 million must be made in relation to their interest.
◆ An apportionment of the profit must be done if the person used the house as a primary
residence for only part of the time it was owned. If a person was absent from the
residence for less than 2 years as a result of the residence being offered for sale and
7