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Is there any capital gains tax reduction if I resided in the property for part of the time owned

Posted 25 February 2016 under Tax Questions


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Shelly says:
24 February 2016 at 13:23

This year, 2016, I sold a flat which I bought at the end of 2011 and took transfer in February 2012. The flat was my permanent residence for 1 year. Will there be any reduction on capital gains tax as I was resident in the flat for 1 of the 4 years that I have owned it?

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TaxTimTaxTim says:
24 February 2016 at 13:38

Did you rent it out for the remainder of the time?


Shelly says:
24 February 2016 at 13:45

The property was rented out for the remainder of the time %u20AC%u201C I resided in the flat during 2012 and it was rented out for 2013, 2014 and 2015.


TaxTimTaxTim says:
25 February 2016 at 1:47

You would apportion the gain for the period you lived there and then the rental period. Only the period applicable to your living in would receive the the primary residence exclusion, the rest of the gain would be subject to CGT.


Shelly says:
25 February 2016 at 8:41

Then would one quarter of my gain on selling the property be exempt from CGT i.e. the flat was my primary residence for one year and was rented for 3 years?


TaxTimTaxTim says:
25 February 2016 at 13:31

Yes, so you would say:

Total Gain/4 less R2 000 000 (capped to that gain amount) = Taxable Gain

Less R30 000 annual exclusion and then divide that by 3 to include in your Taxable Income.


Shelly says:
25 February 2016 at 13:48

My total gain will be in the region of R220 000 therefore, with the exemption amount being
R2 million, would CGT not be applicable since the property was my primary residence for one out of the four years?


TaxTimTaxTim says:
25 February 2016 at 13:52

You would take the R220 000/4 being R55 000 and therefore apply the above formula to 3xR55 000 for the taxable portion.


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