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  • Writer's pictureThe Kaplan Team

THOUGHT OF THE WEEK This is excluded from your CGT liability

Many South Africans are cautions of Capital Gains Tax (CGT) because, essentially, it creates a tax liability when you make a profit on the sale of an asset. It is therefore good news that the capital gains (or losses) made on the disposal of certain assets are excludes from CGT.

Some of the important exclusions are:

1. Personal-use assets , such as motor vehicle , caravan ,artwork , stamp collection, furniture, household appliances and other assets used mainly for non-trade purposes;

2. Personal-use boats smaller than 10m in length;

3. Lump sum payments from pension ,pension preservation, provident preservation and retirement annuity funds;

4. Proceeds from an endowment policy or life insurance policy (with minor exceptions);

5. Compensation for personal injury or illness.

Importantly, on the sale of a South African resident’s primary residence, the first R2million of the profit is also excluded. Other expenses incurred in respect of the home may also be subtracted from the amount of the profit, thereby decreasing the amount of CGT payable.

Speak to one of our conveyancers for advice before entering into an agreement to sell your home.

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This article is not intended to constitute legal advice and is produced for information purposes only and to provide a general understanding of the legal position relating to the topic. It is recommended that advice relating to the specific circumstances of your situation be sought from our attorneys before acting upon the content of this article. This article was written at a particular point in time and accordingly may not always reflect the most recent legal developments, if any, applicable to the relevant topic. Kaplan Blumberg and its partners and/or employees, are not responsible for any consequences which may follow upon any decision taken to act upon the information provided in this article.

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