Unpacking the 2023 budget: how it affects homeowners
Category Property Advice
The main focus of this year's National Budget is on the electricity crisis, as the government has declared that it will assume Eskom's debt amounting to R254 billion. Additionally, a tax incentive program for renewable energy installations was introduced, indicating a positive step towards sustainable energy. However, although the budget demonstrated some improvement in addressing the government's debt, there are still concerning challenges ahead.
How does the new budget positively affect homeowners?
The budget contains various measures that will benefit homeowners and homebuyers in South Africa, and contribute to an increase in property demand and values. Specifically, the increase of transfer duty table brackets by 10% announced by the Minister of Finance in his budget speech is good news for those hoping to buy a home, as it means that properties valued below R1.1 million will not have to pay transfer duty fees. This will help make home ownership more accessible for first-time buyers, particularly since the average price paid by first-time buyers is taken into account.
Furthermore, the news that tax revenue collected in the past year exceeded expectations by R93bn allowed the government to provide R13bn worth of tax relief for individuals and businesses. Adjusting personal income tax brackets for inflation is particularly beneficial for homeowners who are experiencing the costly effects of the increased interest rates on their home loans. Additionally, the personal income tax threshold has been raised to R95 750, which will result in savings for consumers.
The decision not to raise the general fuel levy or Road Accident Fund levy is aimed at alleviating the economic pressure on consumers, especially those in the lower-income group who already struggle to cover their daily transportation expenses. This move will also help to keep transport costs low and enable more existing homeowners to manage their expenses effectively, given that fuel costs are already a significant factor contributing to inflation.
The South African government has given the organisations tasked with battling crime and corruption greater funding. This choice is supported by the conviction that a successful real estate market directly relates to a favourable perception of the nation, which in turn depends on business and consumer confidence in the areas of personal safety, sound governance, and economic progress.
The significant funds allocated towards infrastructure development, including roads, harbours, dams, bridges, and water supply systems, will have a profound impact on job creation and the ability of people to purchase homes. Additionally, these projects will enhance the quality of life in various regions, stimulate the development of new housing options, and make them more appealing to potential buyers.
An end to the power crisis?
The budget has a strong focus on addressing the country's power crisis, with significant tax incentives introduced to encourage more South Africans to adopt renewable energy and reduce reliance on the national grid. Individuals who invest in solar panels will be eligible for a one-year tax rebate of 25% of their expenses, capped at R15 000. For example, if you buy 10 solar panels at a cost of R40 000, this means your personal income tax liability for the 2023/24 tax year will be reduced by R10 000. To qualify, the solar panels must be purchased and installed at a private home, and a certificate of compliance for the installation must be issued from 1 March 2023 to 29 February 2024.
Small businesses can benefit from a two-year incentive that allows them to reduce their taxable income by 125% of the amount spent on renewable/alternative energy generation, with no current limit on this. Additionally, the government is providing guarantees on Bounce Back loans to facilitate financing for these installations. This is expected to lead to a substantial increase in capacity generated by businesses, which can be fed back into the national grid and help alleviate the current power deficit of 4000 to 6000MW.
If you're interested in purchasing a home in the Atlantic Seaboard region, don't hesitate to contact Knight Frank today. Our experienced agents have an in-depth knowledge of the local real estate market and can help you find the perfect property to meet your needs. Whether you're searching for a stylish apartment or a luxurious beachfront villa, we have a wide range of options to choose from. With our expert guidance, you can make your dream of owning a home in this sought-after area a reality. Contact us now to schedule a consultation and take the first step toward finding your ideal home.
Author: Knight Frank
