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Valuations hurt

23 August 2007

According to the law firm strb Smith Tabata Buchanan Boyes, there have been instances in which the South African Revenue Service (SARS) has assessed transfer duty according to the recently recalculated municipal value of the property rather than the purchase price - where the municipal valuation exceeds the purchase price.

SARS normally levies transfer duty on the "declared value" - usually the purchase price - but in terms of the Transfer Duty Act, transfer duty may be levied on the "fair value" (derived from various factors such as the municipal valuation and a commissioned sworn valuation). In cases where there was a marked difference, the conveyancer should object to SARS by submitting third party evaluations with the deed of sale to them.

Nobonke Maba, SARS transfer duty assessor, said that where there was a large discrepancy between the municipal valuation and the purchase price, the deed of sale would be returned with a query as to why the marked difference existed.

Full article on Property24.com

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