Property & Budget 2009: What's good, what's bad
Real estate and tax experts size up this week's budget and what it means for property players.
It came as no surprise to Romeo Makhubela, chief investment officer at Metropolitan Asset Managers, that transfer duty was not eased when finance minister Trevor Manuel delivered the 2009 Budget Speech on Wednesday.
Makhubela said, given the global current economic situation, there was very little that Minister Manuel could have done to ease the transfer duty burden for property buyers.
He said banks have indeed tightened their lending criteria guided by what is currently happening in the market. However, he expects the situation to normalise when the impact of interest rate cuts begin to be felt and this would be in the next 12 to 18 months.
Colin Young, head of institutional property investments at Old Mutual, said it was expected that transfer duty remain unchanged. He welcomed the infrastructure spend which will assist further boosting economic activity.
Transfer duty remains very high by world standards which continues to be a disappointment for the property asset class, said Young.
"The electricity levy won't assist us in managing our large super-regional shopping malls, but as we are increasingly implementing sound green building practices, the impact is manageable," he said.
A highlight of the budget is the tax proposal aimed at promoting energy efficiency and reduce electricity demand, said Anton Kriel, director of tax at BDO Spencer Steward Tax.
Kriel said this tax proposal would have a significant impact on property owners because now they would have to consider whether it's worth spending more money on energy saving bulbs than face hefty levies for not complying with government requirements.
On Capital Gains Tax (CGT) tweaks, Kriel expressed disappointment, saying that it would not make much difference. He sees this move from R1,5m exemption to R2m as an administrative relief than rather provide relief for property owners.
Kriel picked up on a tax proposal for liquidating inactive entities contained in the budget, which might be good news for those property investors ho want to deregister. He said it is not yet clear on how it would be implemented.
Reacting to the budget Dr Willie Marais, national president of the Institute of Estate Agents of South Africa, said the budget can be categorised as "careful" and contains nothing of real excitement for the real estate industry, although this a major contributor to GDP.
"We were disappointed that there was no reduction in transfer duty, although we do recognise the increased threshold for capital gains tax as a step in the right direction," said Dr Marais.
Most encouraging, he said, were Manuel's remarks concerning the SA banking sector. Manuel reiterated that the country's financial system is sound, having been subjected to an international financial assessment last year, however he said banks are "nonetheless affected by deteriorating credit conditions".
The finance minister urged banks to "continue to extend credit to worthy customers, noting that it is precisely the rapid withdrawal of credit that has plunged much of the developing world into crisis".
Also read: Green buildings to get more tax perks
Subscribe to Realestateweb's weekly newsletter by clicking here.
Were you happy with the National Budget presented to Parliament this week? Share your views, below this article.
Services Subscribe to newsletters News feeds
|
||||||||||
Facebook
Google
Laaik.it
Yahoo!
Digg
del.icio.us
Comments
Strike one was NAC, strike two was sub prime and strike three was expected in legislation. Come on guys, the FSB is way ahead in oppressing and destroying small financial businesses in the name of consumer protection. What is wrong with the treasury. . .more
by Free the Rest on February 12 2009, 11:26
Find this comment inappropriate? Report it
My name is Zuma, I dont pay tax,
When it comes to me, SARs is lax,
Why should I pay, I am the king,
Losing that money will cause a sting.
I have to support my many wives,
I dont care how it affects the people's lives,
Whites . .more
by My name is Zuma on February 12 2009, 16:43
Find this comment inappropriate? Report it