 There are two things in life that are certain and we are going to talk about one of them today Taxes specifically property taxes no matter if you are buying selling renting a property There are taxes involved and thankfully it does not have to be as scary as it sounds as usual We are here with insights from experts to help you look at tax differently. This is the private property podcast. I'm doing me Let's get out. Let's get started Congratulations to Tom Fatou Masukwame for walking away with that 500 grand cash prize from yesterday's show Shoot your shot tonight and share this post and tag your friends. You could be that person to walk away with 500 grand cash So four words is for armed and when it comes to property taxes, it's time to grab your pen So you don't miss these five fast facts Number one before you purchase the property be honest with yourself with your financial situation Don't buy a home without taking the necessary property taxes into account You will probably exceed your budget and this will result in serious financial implications that could lead to debt It's always safe to be it's always better to be safe than sorry Before you buy a property, you know what you're getting into What is property tax and what's its purpose? If you can't answer this question, you might not be as ready as you think you are to buy a home Ask the people who know about them or even better keep watching the private property podcast number three Property tax revenue is pretty stable. It is far more stable than income taxes Which can change depending on your employment level or spending habits Property tends to hold its value over time compared to other parts of the economy making property taxes predictable to calculate number four Get an estimated amount of taxes you will have to pay before purchasing a property Contact a local tax assessor to determine how much tax you'll be required to pay It's good to have an idea of the figure of taxes you're about to pay before you buy so you can start preparing your budget and number five Remember it depends on the type of property you are buying selling or renting the taxes differ with each case Make sure you have an accurate figure from an assessor before you lend yourself in the hot water Whether you're a first-time buyer or an experienced property investor We hope that these facts have helped you to gain a better understanding of property tax So our guest tonight is the founder of Bruno Samar eternity He's an admitted attorney and the director and league and head of legal at into integer He brings a wealth of knowledge and experience with all facts that his firm His firm areas of practice his expertise line commercial tax and property law as well as litigation Ladies and gentlemen, please help me welcome with a rousing round of applause there at home Bruno Samar Thanks so much to me Thank you so much for joining us. No, thank you for having me here Our second guest is a chartered accounted and a Texan wealth preservation Petitioner his current role as an executive and head of tax at integer involves advising property investors high net worth families and corporates on property portfolio restructuring and tax planning Ladies and gentlemen, let's welcome chili boy muti. But she boy. Thank you so much for joining us and it's really really a pleasure To have both of you here tonight Thank you so much Jimmy for having me and I'm happy and good evening to the viewers Let's jump straight in the conversation I've got two armed men here who one who is a lawyer and one who is an accountant to tackle property tax So let's talk about the fundamentals. I'll start with you Bruno What are the fundamentals of property tax and what are the when do they apply and when do they not apply? Sure, so property to tax is quite a broad term So we need to look at the different scenarios where property taxes could apply And one to begin with needs to distinguish between property taxes or property rates that's payable to the municipality Because that's something different And then the property taxes that we typically look at when when buying selling and leasing properties So things for example like transfer duties when you buy a property is a consideration that you as a purchaser Need to have in mind when buying Sometimes that might be applicable. So just in the sale process There might be a situation where you need to pay transfer duty and all you might need to pay that Then after the fact one does need to consider when selling a property The implications of capital gains tax because if you sell your property at a higher amount than what you bought it for there might be a capital gains which might lead to capital gains tax being levied and Obviously in a situation where the property is being sold from a deceased estate and that's typically when a person passes away and the property needs to be You know sold to somebody else or passed on to his There's also certain implications where you're looking at a state duty and that's not specifically a property tax But it's a tax on the value of your estate Within which your property falls under so just in the sale Sphere those are a couple of the different tax types that one might one might need to consider Sure. Thank you so much for that. She will I'll ask you to come in here as as an accountant Let's talk a bit about what types of tax. What does one have to pay during a property sale? Yes, I'm as Bruno alluded idea when it comes to property sale You potentially depends on how you held that particular property if for instance you held that property in a long term You're more likely going to be looking at paying things like capital gain tax And for that matter if you were held that property and you are in what we call trading You are going to be liable for ordinary revenue taxes So that is because what you call normal tax Applicable so you the the type of people that you find that are subject to such type of tax Typical what you call developers because they're in the business of trading But then if you are in the business of heavy multi lads and you hold those multi led for in with intention for a long term Then when you dispose such properties, you are going to be subject to capital gain tax Sure And you know you speaking a little bit to to to those who are buying right property sales And I know a lot of our of our viewers are also leasing so someone is asking themselves Do the same apply when we're talking property leasing? So when it comes to leasing we firstly needs to understand what type of property are you leasing? Let's be maybe in terms of residential So if you are leasing a residential property meaning that you attend you've got tenants with that So a residential property is exempt from what you call that What you call that that types textable surplus for that matter So which means that you're not going to be charging things like that, right? Would you agree with me on the revenue side? But however the one that you will be subjected to is what we call normal tax on what you would have made it What we call taxable income having taken into account what you generated as a rental incomes and minors all those other Detectable expenses then the net balance if it's positive and it's like taxable income then you'll be subjected to what you call a normal tax Thank you so much for that so So enlightening because that is that's where a lot of South Africans find themselves leasing and you know Renting out the way they are currently living Bruno, let's bring it back here and say what are the kind of hacks that one can do in order to optimize their tax efficiency so I think planning is crucial and I mean this was one of the key tips that that she spoke about if a person plans ahead for possible tax consequences you can actually structure your Your property portfolio so that it's as tax efficient as possible as possible and there's nothing legal about it I mean this is all perfectly legal just depends how you want to do it And this is where we start speaking about things for example like buying a property in a company Versus buying a property in your personal name versus buying a property in a trust and there's a whole There's a whole variety of different structures of vehicles rather that you can use to store these properties and To allow the flow of income from your rentals For example to flow through these vehicles into your pocket But each one of these is different permutation and different tax consequence So if if we can plan ahead and we know for example how many properties one person intends to buy What's the intended use for these properties as a commercial as a residential? Who's the ultimate beneficiary for these properties? Do they intend to benefit their kids on a day-to-day basis? Do they intend benefiting themselves their elderly parents? Maybe do they just intend holding on to those properties very long term and not utilizing that money each one of these Would give you a different example So for instance the typical example all is used is holding properties for example in a trust and Avoiding the need to have to pay things like a state duty because the trust supersedes your death It continues and survives despite your passing away and your family stays stays as a beneficiary So I mean just one example like that of proper planning could actually save you a lot of money Sometimes up to 33% of your estate as an example Thank you so much for that such great insights that we somehow some of us didn't even know is saving 33% That's a lot of money You know when we're looking at it in ransom sense and I want to now take this back to you Chiliboy and ask in terms of you optimizing Tax efficiency, but also making sure that you stay on the right side of the law because it gets easy when people are now thinking about this in a way Advice, you know given to to to yourself by People from the grapevine, you know your friend did this and this one did that And you know, what is the right way to ensure that you optimize it and ensure that you still stay on the right side of the law? I've always told people that the best way to actually leverage or to Tax efficiency the number one key thing is record keeping because the reality is that if you want to minimize Text legally you will have to justify on other applicable supporting documents Especially for instance, if you are a developer you're flipping properties and you want to claim the vet So Sarsu will obviously ask you for to to support such claims through invoices So if you don't have invoices for that matter, then you might have find it difficult to actually claim and then end up Hailing to pay tax unnecessarily so so I think that's one of the key things and I think also One of the key things is and Bruno just alluded to one is to have a clear intention What are your intentions when you are buying that particular property, right? There is why I'm saying this is how you the intention of that property if it's for long term Or it's for trading has a different text implication So once you are clear on that, I think then you will also have a optimal text text structuring So I think also another thing with regard to that what I've seen is those people that you find that He had a property they stayed in it and then now they're changing the use of that particular property now into long term Investment structure. I will say without going too much into the technical to say because you're changing that usage Rather speak to a text plan to say how best do I then move this property because you might find yourself having not structured Things at optimal level. So I think those are some of the key things that I can actually share with you with people just to Optimize their taxes. Sure. Thank you so much We are we are closing our conversation and rounding it up And I just want to know last words from all of them from the both of you Bruno Let me start with you Sure. So, I mean again, it goes back to planning. I don't think I can emphasize it more Such benefit can actually be attained just through putting pen to paper Exactly what Schley Boy said things like record keeping all of this falls perfectly into place if you know what you're doing if your intention is to buy properties as an investment for example and You've got a good strategy and a good system to put everything into place because when you sell it when he has time You want to have this invoice well in place so that when sauce comes knocking on the door? You're ready Sure. And and yourself to the boy I think from me that the first thing is that when you're going to add deals when you're going to invest in properties Be very clear. What is your business strategy number two because then that Influences also the intention and the objective of that particular property transaction because then you will know whether you're putting that property in a trust as Bruno earlier said or in a company or it for that matter you might invest in a personal money So once you've got a key objective on also how you're going to utilize the Generated revenue whether it's for investment or is it for distributions to leave off it to support your salaries as Many say that they need a multiple streams of income to survive these difficult economic Conditions, so you need to actually be more clear so that then then once we clarify your position Then you need to speak to the tax planners to say, okay, here my Education yes, well, I'm going with my property journey How would I then optimally structure my my investment structure? And then once you've called that and then you've got these tax planner that can assist you on going to say this such investment structure I think you'll be on the ball No, thank you so much gentlemen, and it was really a pleasure talking property text with you Thank you so much for taking our time and giving us these insights You know, it's always great to have experts around the table to talk really important stuff about Property, thank you so much for joining us and have a great night Thank you so much Jimmy for having us Thank you so much to you for staying till the end of the other episode tonight And it is time for me as usual to announce the winner of that 500 grand cash prize for the person who mostly Interacted with us and the winner for tonight is going to come up when I do in the drama comes in Ladies and gentlemen, let's put our hands together for happiness Malulah Who is the winner for tonight's 500 grand? Thank you so much for interacting with us and sharing tonight's post with everybody You think needs to hear this this conversation Join us tomorrow again for another inside packed episode and also don't forget to like share and subscribe to all our social media Platforms. Thank you for joining us on the private property podcast. My name is to me. Have a good one