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Capital Gains Tax of a property that was 5 years primary residence and then 6 years Rented out?

Posted 17 November 2015 under Tax Q&A


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Tegesin says:
17 November 2015 at 9:01

I have a second property that was my primary residence for 5 years (bought for R200k) and then rented it out for another 6 years. Not I sold it (R500k). Do I pay Capital Gains Tax for the entire 11 years (R300k) or can I pro-rata the Taxable Capital Gains as (6/11 x R300K = R163. 6k).

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TaxTim TaxTim says:
17 November 2015 at 21:37

Yes, that is correct - you would always pay full Capital Gains tax on the portion which is not used for primary residence purposes. Therefore, you pro-rata the gain as you have correctly stated, and one third will be added to your taxable income and taxed at your marginal rate of tax. The primary residence exclusion will apply to the remaining portion of the gain (i.e 5/11 X R300K.) which will therefore not attract Capital Gains Tax.


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