Chantelle Benjamin
Johannesburg Metro Editor
INVESTORS buying into inner-city developments stand to benefit from tax deductions in four new municipalities, the finance department said last week.
Finance Minister Trevor Manuel approved applications by Ekurhuleni, Polokwane, Nelson Mandela and Msunduzi for urban development zones, bringing to 13 the number of municipalities to receive approval.
The zones offer investors a 20% income-tax deduction in the first year for refurbishment of existing buildings, plus annual depreciation of 20% over four years.
The deduction can be offset against any income, including personal income tax, and not just income from the building.
A salaried individual who owns a flat in a zone can depreciate refurbishment costs against regular income tax.
For new developments, a tax deduction of 20% is offered in the first year, plus an annual depreciation of 5% for the next 16 years.
Zones for Johannesburg and Cape Town were approved in October last year. Still to be approved are Emalahleni, Mafikeng and Matjhabeng. The treasury is working with the municipalities to ensure final applications are submitted "as soon as possible".
Publisher: Business Day
Source: Business Day
