PROPERTY TAXES

Tax considerations when selling your property – Farayi Moyo and Brenda @ Kennan

Following on from our previous article ‘Unlocking the value of your property’ we shall now delve into the tax implications concerned with selling or transferring your property.

Whether you possess rights or ownership of immovable property such as land and buildings or marketable securities which can be in the form of shares, debentures, unit trusts, bonds and stock it is a requirement of the law to pay Capital Gains Tax (herein “CGT”) or obtain an exemption when one decides to dispose of the same.

It should also be noted that since the 1^st of January 2014 the disposal of cessions are also liable to payment of CGT.

Further, it is the responsibility of the Seller through his/her nominated agent or conveyancer to pay or obtain and exemption for CGT.

Property can be disposed in a number of ways; namely by an agreement of sale, deed of donation, bequest resulting from a deceased’s persons estate or an order of the court.

While generally the Zimbabwe Revenue Authority, (Herein “Zimra”) accepts the values submitted by the Seller for the property, it is permissible for values to be rejected where Zimra is of the view that the value is below the fair/open market values for similar properties. In such an instance, the Seller would be required to obtain a valuation report from an independent valuator, duly registered as such.

It also holds true that valuation reports must be submitted together with applications for CGT where properties are intended to be donated.

Moreover, similarly where a property is the subject of transfer from a deceased estate, a valuation report must be lodged albeit with the Master of the High Court.

The CGT thresholds payable when disposing of property will depend on when the property was acquired as well as when it is disposed. A competent Real Estate Agent or Lawyer will be able to advise on the tax liability taking into account the purchase and selling price of the same.

There are instances where a Seller will be exempted from paying CGT, some of which are; transfer of specified assets between spouses, transfer of principal private residence between former spouses in pursuit of a divorce order, transfer/disposal of a specified asset by a deceased estate, transfer/disposal of a principal private residence where the individual(s) are above the age of 55 at the date of sale/transfer.

It may also be permissible to obtain permission to defer the payment of CGT, such as when selling one principal private residence to purchase another or where interests are transferred from one entity to another ordinarily under the same control however it is recommend that one seeks legal advice on the mechanisation of such arrangements.

Lastly, Zimra has recently introduced a new taxation system called Tax and Revenue Management System (“TaRMS”). TaRMS replaces Business Partner Numbers with Tax Identification Numbers which aims to simplify and improve overall tax compliance. All taxpayers be it generally or for CGT purposes are required to register to the new system.