WHEN Finance Minister Trevor Manuel delivers his budget speech today, the most likely change that will be made to support the property market will be a further cut in transfer duties.

This is the view of Jacques du Toit, senior economist at Absa, who says the revenue government receives through transfer duties has increased tremendously since 1999.

In 1999 government received R90m a month from transfer duties on property sales, he says. By the end of last year this had increased to R600m a month.

Du Toit says government earns huge amounts of money from property deals because prices have increased so sharply.

In 1999 government applied no transfer duties to sales of up to R150000, and 5% was charged on the value above R150000. From R320000 the duty was a flat R8500 charge plus 8% of the value above R320000.

Illustrating how transfer duties have increased, Du Toit says if you bought a property for R400000 in the 2001-02 fiscal year, the transfer duty would have been R21700. Government has since reduced this rate so that in the 2004-05 fiscal year you would have paid R14900 on a R400000 property, a saving of R6800.

However, Du Toit says that if you assume that the same property, which was worth R400000 in the 2001-02 fiscal year, has increased in value and is now worth R800000 in the 2004-05 year, transfer duties would now be R46900 because of the huge increase in the price of the property.

Du Toit says that if government wants to give support to the property market in SA, and promote home ownership, it will "definitely look" at the option of further cuts to transfer duties.

He says another issue government may look at in the budget is tax relief on the interest on mortgage repayments. "If you can subtract the interest (paid on your mortgage) from taxable income, your tax paid would be lower and it would be easier for people to afford a home. It will support home ownership."