All you need to know about property-related taxes
South Africa - Money
Property-related taxes include municipal rates (sometimes confusingly referred to as ‘property taxes’) and charges for refuse and sewerage, although the latter apply mainly to those in urban areas; there are no refuse or sewerage services in some rural areas!
Most South African property owners must pay municipal rates, based on the ‘market value’ of their property; some rural properties are exempt, although there are government plans to include them. The calculation of municipal rates was controversially changed in March 2004, when the Local Government Municipal Property Rates Bill became law.
Previously, poor areas were charged a higher percentage than wealthy ones, so lower income households effectively subsidised wealthier ones, but rates are now levied at a common percentage (around 1 per cent) irrespective of property values, although municipalities may levy different rates for different types of property, e.g. residential, industrial, commercial, business, agricultural and commercial. In the case of sectional title schemes, rates are applied to the whole scheme and divided among individual owners according to their Participation Quota.
Your municipality will send you a valuation notice, stating the official value of your property. From this, you should subtract the specified ‘rate-free’ amount (usually around R50,000). Then multiply the net figure by the municipal rates percentage (e.g. 0.98 per cent in Cape Town) to calculate the annual amount payable. Divide this by 12 to arrive at your monthly payment. For example, if the value of your house is R1 million (€103,251), you will pay rates on R950,000 at 0.98 per cent (in Cape Town), which gives an annual municipal rates bill of R9,310 or a monthly rate of R776 (€80. 20).
Like municipal rates, refuse charges vary from place to place. In Cape Town, for example, there are two parts to the refuse charge: the first is calculated by subtracting R50,000 from the valuation of your property (as with municipal rates) and multiplying the result by 0.038 per cent (R360 on a property valued at R1 million); the second part is a charge of R38.60 per month for a 240-litre ‘wheelie’ bin, or R33.60 if one isn’t available (and you use plastic refuse bags) – half these amounts if your property is valued at less than R100,000 (if it’s worth less than R50,000, you get a free bin!).
Sewerage is also usually charged in two parts: a fixed charge of up to R38, depending on the value of your property, and a variable charge according to your water consumption, as follows:
Charge Per ‘000 Litres
0 – 4,200 litres
4,201 – 14,000 litres
14,001 – 35,000 litres
So, if you consumed 200,000 litres in a year (average for a couple or small family), you would pay R650 plus the fixed charge.
- Obtaining Cash:
- Importing & Exporting Money:
- Cost of living:
- Double-Taxation Treaties:
- Income tax:
- Capital Gains Tax:
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