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CGT Calcualtion for Primary residence

Posted 1 February 2017 under Tax Q&A

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Gregory says:
31 January 2017 at 10:30

CGT Primary Residence with a home office

Base Cost R3m
Proceeds R7m
I use 33. 33% of my primary residence exclusively for trade/business. I have claimed these expenses for the past 4 years when doing my IT12. I have owned the primary residence for 11 years. How do a calculate the CGT taking into account 7 of the 11 years were 100% primary residence

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TaxTim TaxTim says:
31 January 2017 at 15:32

You would apportion the proceeds and base cost for 7/11 as this was the time period related to actually living there. The other 4/11 will have to be declared separately under the CGT section and taxed accordingly.

Gregory says:
31 January 2017 at 16:13

Please can we have a bit more details and perhaps an example of the calculation

TaxTim TaxTim says:
1 February 2017 at 12:53

For the primary residency portion you would do the following:

Proceeds - R7m and multiply that by 7/11
Base Cost - R3m and multiply by 7/11
You would then arrive at a capital gain and that would have the R2m primary residence exclusion applied to it. Essentially the gain of R4m would be multiplied by 7/11. You would complete this in the tax return.

Then you would have to take the R7m x 4/11 less base cost of R4m x 4/11 and complete that in the tax return as well, but click no to Primary Residence.

You would need to say you are completing two capital gains transactions on your tax return.


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