Office Badger | UDZ – Tax incentives for rejuvenating our cities
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UDZ – Tax incentives for rejuvenating our cities

26 Sep UDZ – Tax incentives for rejuvenating our cities

Urban Development Zones (“UDZ”) have been introduced to incentivise investment and rejuvenation of the cities in South Africa. Purchasers of property in various cities will receive a tax incentive provided certain conditions are met.

Cities where UDZ is available:

  • Johannesburg CBD
  • Cape Town CBD or
  • Durban CBD

The incentive is available to purchasers of property who are leasing out the property for rental income and not occupying the property themselves.

Investors of purchasers receive a deduction or tax incentive reducing their rental income depending on whether the building is new or improved:

New building:

  • Developer who rents out the new building:
    • 100% of the cost price over 11 years
    • 20% in year 1 and 8% for each of the next 10 years
  • Purchased from a developer:
    • 55% of the cost price over 11 years
    • 20% of 55% in year 1 and 8% of 55% for each of the next 10 years

 

Improved Building:

  • Developer who rents out the new building:
    • 100% of improvement cost over a 5 year period (20% each year)
  • Purchased from a developer:
    • 30% of the cost price over 5 years (20% of 30% over 5 years)

 

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