Real estate is happy that tax brackets will boost sector
DURBAN - THE REAL estate sector commended Finance Minister Tito Mboweni for his commitment to roll out the vaccination programme urgently to boost the country's economic recovery, which would support the sector.
Pam Golding Property chief executive Dr Andrew Golding said yesterday that apart from the commitment made to the urgent rollout of the vaccination programme, of comfort to debt-burdened consumers was that there would be no increase in personal income tax, but instead, a 5 percent adjustment in the personal income tax brackets, which would then combat fiscal drag and provide R2.2 billion in tax relief targeting lower and middle-income households.
Golding said most important from a property perspective was what the Budget would do to address obstacles to economic growth and to boost business and consumer confidence.
“Tax relief for both individuals and businesses will provide a boost to confidence levels, particularly as possibly significant tax increases were predicted as possible, by some commentators. Government's ongoing commitment to fiscal consolidation should also be well received by the ratings agencies and investors,” said Golding.
Chas Everitt International property group chief executive Berry Everitt said although they found the Budget short on detail, they applauded Finance Minister Tito Mboweni for tabling a “hopeful” Budget rather than an austerity plan and for his continued commitment to fiscal discipline and consolidation.
From a real-estate perspective, Everitt said that the most important single item in the Budget currently was the R10 billion allocation for the purchase and distribution of Covid-19 vaccines, which she said needed to be administered as fast and efficiently as possible if South Africa was to achieve any real measure of economic recovery in the next 12 months.
“Property and construction and all the downstream sectors are, of course, vital to the economy as significant job creators, but we also need people to have jobs in order to keep purchasing and investing in real estate.
“And that is not going to happen unless major private investors, foreign and local, have enough confidence in South Africa's post-Covid economic stability to put their money into the major public-private partnership projects envisaged by the Minister and the President in his recent State of the Nation address,” said Everitt.
RealNet estate agency group managing director Gerhard Kotzé said it was disappointing, though, that the Treasury found no money to support home ownership by reducing property transfer duty, although it did make a R7bn allocation to bail out the Land Bank once again.
“And, even though the economy is expected to grow by 3.3 percent this year (compared to a decline of more than 7 percent last year), the country's gross debt levels remain worryingly high at R3.95 trillion currently – with far too much being spent on repayments rather than the redevelopment of infrastructure and the employment creation that is the current biggest need in South Africa,” said Kotzé.
Jawitz Properties chief executive Herschel Jawitz said the 2021 Budget had offered some surprising upsides.
“As expected, there was no further direct relief with regard to the purchase of residential property with the transfer duty exemption threshold remaining at R1million and no changes to the Capital Gains Tax threshold.
“What was noted in the details was that income from property taxes was expected to be flat from last year, but is expected to grow by R1.4bn to R16.8bn in the 2021/22 year.
“The numbers relative to the overall Budget are small and perhaps more residential transfer duty relief would be more than offset by increases in home ownership,” said Jawitz.