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Treasury launches Urban Renewal Tax Incentive

Posted On Friday, 15 October 2004 02:00 Published by eProp Commercial Property News
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The National Treasury launched its Urban Renewal Tax Incentive scheme to stimulate investment in the country's urban areas.

Property-Housing-ResidentialFirst unveiled in the 2003 National Budget and formally legislated in December 2003, the incentive is an accelerated depreciation allowance to promote and stimulate development within the inner cities of 16 large cities in South Africa.

The Treasury said the Urban Renewal Tax Incentive encourages the refurbishment and construction of both commercial and residential buildings in designated decaying inner city areas within selected municipalities.

It is hoped that such investment within these inner city areas will return them to their former glories as vibrant city centres attracting more and more people to live, work and be entertained in these places.

It will also result in broader growth enhancing effects, especially, on job creation.

The incentive offers a great opportunity to investors, both companies and individuals, to participate in the urban renewal and development of the inner cities.

The Urban Renewal Tax Incentive will take effect from October 14 in the Urban Development Zones (UDZs) of Johannesburg and Cape Town, as formally gazetted in Government Gazette No. 26866.

The application for eThekwini is at an advanced stage and is expected to be gazetted by November. The National Treasury has also received applications from Tshwane (Pretoria), Emfuleni (Vaal Triangle) and Sol Plaatje (Kimberley).

This incentive supports other initiatives, such as policies to write-off existing bad debt from particular buildings in the inner city in order to allow for these buildings to be sold, restored and refurbished.

The incentive will also support the objectives of the Department of Housing's comprehensive plan for the development of sustainable human settlements by encouraging private investment in affordable rental housing in the inner city.

Furthermore, it provides a possible catalyst for public-private partnerships in mixed-used developments that provide social facilities that are integrated into new commercial and residential developments.

The incentive translates into considerable financial benefits for investors, especially for refurbishing existing buildings.

For redevelopment projects, there is a 20% tax deduction in the first year, plus an annual depreciation of 20% over four years.

For new development, it offers a tax deduction of 20% in the first year, plus an annual depreciation of 5% for the next 16 years.

The Johannesburg UDZ includes the central business district, and also Newtown and Braamfontein, as well as the high-density and high-rise residential areas of Hillbrow and Berea.

Other lower-density residential areas surrounding the general Ellis Park area such as Bertrams, Judith's Paarl, Doornfontein, and Troyeville, as well as Bellevue, Bellevue East and Yeoville form part of the approved UDZ.

The manufacturing and industrial strip to the north of the M2 E/W from Benrose in the east to City West in the west is also included.

Cape Town has two urban development zones, capturing part of the Cape Town central business district (CBD) and the Bellville CBD.

Most of the historic Cape Town CBD is included and properties adjacent to the Main Road and Klipfontein Road Corridors are included.

This includes portions of the suburbs of Salt River, Woodstock, Observatory, Maitland, Mowbray, Athlone and Gatesville.

The second Cape Town UDZ includes the older part of the Bellville CBD, focussing on land adjacent to the Voortrekker Road Corridor and around Bellville Station.

Some properties along Modderdam Road and Kasselsvlei Road are also included. Both municipalities have proved that they meet the criteria as set out in the legislation.

The proposed area for the eThekwini UDZ includes parts of Walter GilbertRoad, Bell Road, Shepstone Road, Bay Terrace, Victoria Embankment, Alexandra, Brook Streets, West Street, Berea Road, Carters Avenue, Canongate Road, Warwick Avenue, Centenary Road, Carlisle Road, First Avenue, Stamford Hill Road, Croydon Road, Walter Gilbert Road, Cobham Road, Old Fort Road, NMR Avenue, Somtseu Avenue, Stanger Street, Argyle Road, NMR Avenue until Walter Gilbert Road.

Last modified on Thursday, 29 May 2014 12:12