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Property sale issue

Posted 11 January 2016 under Tax Questions



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Phil says:
6 January 2016 at 20:15

I'm selling a property of mine - it's my primary residence. The sale agreement will have the buyer settle the amount with me in monthly installments. Will this cause a problem with my tax return in terms of capital gains etc? Or would the end result be the same as if the buyer had paid me a lump sum?

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TaxTimTaxTim says:
7 January 2016 at 12:33

You need to indicate the total proceeds per the sale agreement on your tax return (it doesn't matter how it is settled). The capital gain will be calculated on the total amount due to you regardless of when you receive the cash.


Phil says:
7 January 2016 at 13:33

Thanks very much. Am I right in assuming that since the capital gain is less than R2 million and is for my primary residence that no tax would be owed to SARS?


Phil says:
7 January 2016 at 16:35

Thanks very much. Am I right in assuming that since the capital gain is less than R2 million and is for my primary residence that no tax would be owed to SARS?


TaxTimTaxTim says:
7 January 2016 at 18:52

Yes, that is correct.
You should still disclose the details in you tax return though.


Phil says:
8 January 2016 at 6:36

Thanks very much - I'll definitely disclose the details.
Just one more question:
If the payment terms are 3 years, and the property will transfer only after the payment is settled in full (end of the 3rd year), when do I need to declare the sale? In the tax year of the sale agreement, or in the tax year of the property transfer?


TaxTimTaxTim says:
9 January 2016 at 16:24

If the purchaser defaults on the payment terms, presumably the sale won't go through - is this correct?


Phil says:
9 January 2016 at 16:25

That's correct.


TaxTimTaxTim says:
11 January 2016 at 11:46

You would declare the sale in your tax return in the year the property is transferred.


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