Spending a windfall

BY BONNY FOURIE bronwyn.fourie@inl.co.za

Experts give advice on how to spend a tax refund and answer other property queries

Q: APART from moving into a brand-new home, what are some of the benefits of buying a property off-plan?

A: Buying off-plan is recognised in South Africa as a somewhat more affordable way to enter the property market, as there is no transfer duty payable, a factor that can mean the difference between whether the buyer can afford the property or not.

Many of the benefits of buying off-plan are financial, including the fact that VAT is included in the purchase price. Furthermore, since the property is yet to be developed and built, the buyer purchases it at today’s price but only starts paying once the property is completed, which means they are locked in at a lower price.

In the period between when the property is purchased off the plan and when the owner takes occupation, there may be capital appreciation on the asset, which is a great advantage. – Bruce Swain, chief executive of Leapfrog Property Group

Q: Does a body corporate have the right to evict sectional title owners over unpaid levies?

A: Levies are not optional and owners have a legal duty to pay them in full and on time.

Non-payment by one or more owners can put very real strain on the health of a sectional title scheme and recovering those costs is absolutely vital.

But body corporates cannot just evict an owner for unpaid levies; a legal process needs to take place. However, the legal process required to do this is long, complex and costly, and doesn’t always work out the way people assume.

There are two main options available to body corporates when an owner fails to pay levies and does not respond to attempts to resolve the matter amicably. The first is to lodge the matter with the Community Schemes Ombud Services. The second is to approach the courts.

While many schemes’s default reaction to owners in arrears is to turn to the courts, this isn’t necessarily the best – or fastest – way to resolve the issue. Approaching the ombud is generally a better idea. It costs less and doesn’t require the involvement of attorneys. – Craig Mott, regional sales manager for the Rawson Property Group

Q: When it comes to latent and patent defects, how can we be sure that we know what to look for when we are buying?

A: Latent defects to the property are those which cannot be seen with the naked eye or after a fair inspection has been made.

Patent defects to the property are those which can be seen with the naked eye or can be established after a reasonable inspection of the property by the purchaser.

The purchaser has a legal obligation to conduct a thorough inspection of the property to determine any patent defects before making the offer. Addressing the defects can be included in the offer. In the event that patent defects are not addressed in the offer to purchase, the seller has no legal obligation to attend to their repair.

The voetstoots clause is included in most sale agreements and its purpose is to protect the seller against liability for any latent defects to the property, unless the buyer can prove that the seller knew about them and tried to conceal the defects from the purchaser. – Cobus Odendaal, chief executive of Lew Geffen Sotheby’s International Realty in Johannesburg and Randburg.

Q: We have decided to spend our tax refunds on our home, both for our benefit while living in it and also to add value when we sell one day. What are wise areas to spend on?

A: The first thing homeowners should consider doing with a tax refund is to use it lower the capital portion of their home loan, because this could help them save thousands of rands in interest charges over the life of the loan – especially if they make a habit of doing it every year.

You may, however, want to spend your tax windfall to help fund something more immediately enjoyable. In this case, good choices include: • A second bathroom to make life easier now and lift the value of your home when it is time to sell. • A new coat of paint that will keep your future maintenance costs down. • Improvements to your security system that will lower your short-term insurance premiums.

Rising municipal service charges may also prompt homeowners to use any tax refunds this year to help make changes relating to electricity and water consumption.

These could include:

• Roof insulation to help keep your electricity bills down.

• Switching to long-lasting and low-power LED lighting and bulbs wherever possible.

• Installing tap and shower aerators and low-flow toilets.

• Replacing an old power-guzzling fridge or washing machine with energy star-rated appliances that use much less electricity.

• Installing a water storage tank to save the rainwater that runs off the roof and cut consumption of municipal water.

If you feel you really should splurge on something new, why not consider a solar geyser or a few photovoltaic panels so that you can start converting your home to run on free energy? – Gerhard Kotzé, managing director of the RealNet estate agency group

In addition to moving into a brand-new home, buying off-plan offers many financial benefits. PICTURE: JEAN-PAUL JANDRAIN/PIXABAY