Rates Valuations could to lead to higher transfer duty

Council have recently completed the latest round of rates valuations- and as with several other areas, Hout Bay appears to have several inaccuracies.

Usually the rule of thumb has been for about a 15% margin of error however in this case the margin of error is more like 40%. As the valuations are intended to last the next 5 years this would not ordinarily have been a problem.

Recent transfers in the Deeds Office have discovered that an old piece of legislation with in the Transfer Duty Act stipulates that transfer duty is payable upon whichever is the higher, the sale price or the rates valuation.

One property, which took three months to sell at R1,6million had a rates value of R2.2million which meant about R50 000 extra in duties that the buyer had to pay. A quick survey of properties on the market showed that at least 30% of properties currently on the market have significant differences between asking prices and rates valuation.

In one instance the client had a R1,6million property falsely valued at R4million.

Sellers will have to tread carefully, and most disclose the rates valuation or risk the buyers overextending himself and the deal falling through. If the Seller wishes to object to the valuation, the objection and a motivation from the estate agent must be accompanied with the application.

To check your rates valuation visit our homepage at www.houtbayrealestate.co.za and click on the link below the featured property.

Contact Matt for an up to date market valuation on matt@mmre,co.za