Video tour – Hartenbos Heuwels house

Thinking of getting a place in Hartenbos? Consider this beauty.

The large family home is situated on the sea side hills of Hartenbos Heuwels, the popular holiday mecca in the Garden Route region of the Western Cape, South Africa. It is a short drive to Hartenbos beach with all its attractions and entertainment facilities. The Langeberg Mall and the N2 highway are just as close by.

The current owners had built the home only a few years ago, and they have looked after it lovingly. As a result the property is in pristine condition and the face-brick finish offers a low maintenance, solidly built family structure. You will be able to move into the home as it stands immediately with no major renovation or maintenance required.

The home is situated on a large stand and boasts a beautiful indigenous garden. There are a number of contemporary rock features and rest areas to be found throughout the large garden. With the water restrictions recently lifted in Mossel Bay, this will offer a delightful weekend activity to those with green fingers who love to potter in the garden. If you are less inclined to while your hours away in the garden, the garden can be maintained easily.

Check out the full listing with photos on our website.

Investing in the hotel and leisure industry in the Garden Route

Terblanche Total Property Solutions are proud to offer this investment opportunity to our clients:

Own four businesses for the price of one. This hotel, restaurant, spa and conference facility costs the same as a large guest house. It is located in the ever-so-popular Diaz Beach of the Garden Route region of the Western Cape of South Africa.

Contact Deon Terblanche here for more information.

 

How to save one million in 9 years

Buying your own home will be one of the best investments you ever make. However, the way you manage your Bond can either enhance or destroy your future financial independence or retirement.

Assuming you purchased a home for R1 Million with an 80% Bond (R800,000). The negotiated interest rate is one below prime, or 14,5%, which translates to a monthly repayment of R10 240.

To calculate how much you will have to pay over the full period (240 months), simply multiply the monthly repayment amount by 240 and you will be amazed to find that your Home Loan could, in reality, be costing you R2,457,600! That translates to interest charges of R1,657,600 and what has transpired is that you have allowed the Bank to benefit from the benefits of compound interest.

Unfortunately the Banks rarely teach us to pay our Bonds off quicker, hence many South Africans only pay the minimum amount on their Home Loan. This is one of the reasons so few South Africans are able to create wealth.

So what would the difference be if we were motivated, disciplined and able to increase our repayment each month?

If we look at the impact of injecting an additional R1,024 (10%) and R3,072 (30%) into our Home Loan, the figures are absolutely amazing. If I paid an additional R1,024, I would pay the mortgage off in 13yrs 7 months. More importantly, I would save R625,000 in interest alone!

By paying an additional R3,072, I would pay the mortgage off in 9 years and would save R1Million in interest!

This equates to a return of 21,96% on the additional payments made, which in my book is the best investment you can get, expecially as it is virtually risk free.

* Article by Alec Riddle on Business Link Magazine’s blog

Expats buying back

We came across some interesting stats recently, which showed that South Africans living overseas are investing in SA in anticipation of the 2010 World Cup. Property 24 reports that the hospitality industry in particular is showing an upswing with expat South Africans investing in guesthouses back home in anticipation of a 2010 boost in the hospitality industry.

Some of South Africa’s largest real estate groups have recognised there is a shortage of accommodation for the World Cup, which makes investing in guesthouses and lodges a viable investment at this stage. According to information recently released by Pam Golding, transactions to the total value of over R130m over the past 12 months have been concluded by them in this regard, and some 70% of the guest lodges went to overseas buyers or South Africans returning to the country. Of course, with their stronger currencies, these South Africans find it easier to invest in the country of their birth than their local compatriots.

In the Garden Route, especially towns such as Knysna and Mossel Bay, there seems to be a similar trend developing. The great thing about these towns in the Garden Route is that they are close enough to Cape Town (either by air or road) while offering the discerning traveler a distinctly unique experience. They will definitely appeal to those travelers who want to be close enough to the soccer action, yet far enough out of the hustle and bustle of the city to offer the weary tourist a true South African experience. The area is well-developed and a town such as Mossel Bay (South Africa’s town of the year in 2007) is well managed by the local authorities and the local business people. The whole Garden Route is geared for tourism all-year round and a sizable chunk of the local GDP is produced by the tourism industry.

As always though, potential investors need to do their homework properly before they buy. Sheryl Ozinsky, the former manager of Cape Town Tourism, warned that the Soccer World Cup was likely to leave a vacuum in its wake if developers and buyers over-capitalise on the hospitality industry. Huge events like the world cup tended to displace more visitors than they attracted, she said. “It’s not going to make money for lots of people…I think it’s important that people see this event in its context.” Our advice is that potential investors speak to professional advisors to make sure they invest in properties and businesses that are sustainable after the World Cup.

Our view is that many overseas South Africans are coming back to the country… and not just to buy property with a view on 2010. Many of them come back for other reasons too such as work contracts expiring, a need to be closer to their families, inability to get permanent residency overseas, or just because “the grass wasn’t greener”.

Talk to us if you’re looking for some green grass of your own.

How attractive is a trust as a vehicle to hold residential property?

Our blog post this week looks at one of those questions our clients often ask us, “Is it better to buy residential investment property in my own name or through a trust?” The short answer to this is that it depends entirely on your specific circumstances and requirements. There is a longer answer to this as well, which is provided here below by Dave Warneke, tax partner at Cameron & Prentice Chartered Accountants.

“The correct answer depends entirely on the circumstances of the investor. However, having said that, we find that the most common recommendation we make where the investor is a private individual and the property is a residential investment property i.e. not a primary residence, is for the property to be bought into a trust. Where the property is to be a primary residence, then by holding the property in a juristic vehicle such as a trust, the R 1.5 million primary residence exclusion for CGT will be lost when the property is disposed of. This can make this option less attractive, as the primary residence exclusion results in a maximum saving of R 150 000 in CGT.

The advantages and disadvantages of trusts as vehicles for holding residential investment property are as follows:

Advantages

1. Compared to holding the property in the hands of an individual, Estate Duty is saved -at the rate of 20 % of the market value of the property at the date of death. Although an exemption from Estate Duty applies where the property is left to a surviving spouse, this in effect amounts to a deferral of the Estate Duty problem rather than a true saving, as Estate Duty is payable on the death of the surviving spouse.

2. Compared to holding the property in the hands of an individual, CGT on death is saved -at a maximum rate of 10 % of the market value of the property at the date of death less base cost. Although roll-over relief exists where the property is left to the surviving spouse, this amounts to a deferral of the capital gain rather than a true saving, as CGT is payable on the death of the surviving spouse.

3. Growth in the value of the property is protected from creditors of the investor.

4. Relatively low compliance costs: trusts are not subject to statutory audit.

5. Flexibility: a discretionary trust allows the trustees to allocate rental profits from the property to whichever beneficiaries they choose. The same applies to distribution of capital gains if the property is sold. This can achieve income tax savings and give effect to the wishes of the founder.

Disadvantages

1. Although Estate Duty at 20 % and CGT at 10 % on the death of an individual are saved by holding the property in a trust, if the trust disposes of the property and does not distribute the resulting capital gain, CGT is payable at the rate of 20 % of the capital gain, compared to a maximum CGT rate of 10 % for an individual investor.

2. If rental profits are retained in the trust and not distributed to beneficiaries, the rate of tax in a trust is a flat 40 %, compared to a sliding scale for individuals that only peaks at a rate of 40 % on taxable income above R 490 000 per annum.

3. Transfer Duty is at a flat rate of 8 % on the value of the property purchased by a trust. This compares with a sliding scale for individuals that only peaks at a rate of 8 % (on so much of the value of property as exceeds R 1 million.)

4. There are some compliance issues which also involve costs. The trust has to be set up, annual financial statements and income tax returns (annual and provisional) need to be submitted and meetings of trustees need to be held.

5. An element of control over the property can be lost as the investor has to abide by the wishes of the trustees. However, most trusts are so-called ‘dog-collar’ trusts in that the trustees are initially selected by the investor from persons that he /she trusts (and the investor would usually be one of the trustees).

6. Since a trust cannot enter into a pre-incorporation contact, the trust must first be set up (average time taken one month), before the offer to purchase document is signed.

7. The primary residence exclusion from CGT will be lost. This amounts to a maximum saving of R 150 000 in CGT on disposal of the primary residence.It’s imperative to weigh up the pros and cons, and talk to a professional who understands your unique circumstances.”