WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2007-07-31 Time: 00:00:00 Posted By: Jan
[An interesting article on the property market from The Sunday Times. Jan]
Many South Africans throw out their chests and brag about how much they have made in the property market boom.
Some are going to stay in, expecting even more to come between now and the World Cup 2010. But I am getting many calls asking: “Matthew, how much capital gains tax will I pay if I cut and duck today?”
Yes, property owners have done very well since 2001. But, the question is, how well?
And I don't go for the Absa index in determining this. That's old hat. The question that worries me is the hidden costs that have not even been considered in all the euphoria. See if any of these strike a chord.
Rates have gone through the roof. That has two components. The rate itself and the value of the property. The increase in property prices has played straight into the hands of the local authorities.
Short-term insurance costs have had to be adjusted. Just look at what you were paying three years ago. And life insurance cover often should be increased to provide for increased estate duty and CGT exposure if the house is to be bequeathed to the kids.
Maintenance, maintenance and more maintenance. Get a Jacuzzi and the future costs represent far more than bubble bath and cocktails. Anyway, for many the only time there is more than one in the Jacuzzi is when the plumber and his assistant arrive to fix it.
And then there are the never- ending stop orders for security that doesn't pitch, DStv, Internet, mountains of designer dog food and more.
Now convert this into an off- balance sheet liability. Say it costs R10 000 a month to pay for all this. The pretax equivalent at 40% tax rate is R16 667 a month or R200 000 a year.
The other day I heard a financial adviser say that you need retirement capital of between 12 and 16 times your income requirement in retirement. So, I conclude that if you want to retire in anything but a townhouse you better have between R2-million and R4-million allocated to it in your retirement plan.
All this is before we even bring home the modern prodigal son. The parable goes that they killed the fatted calf when he came home alone and stone broke. Maybe we can still live with that. But if we rewrote the parable today, the prodigal son would probably pitch up with a wife, two kids and a mother-in-law in tow.
I have noticed that many pensioners are getting the message and cashing in on current property prices. I think this trend will increase and that we will see a lot more property coming on to the market. This will increase demand for cheaper houses, retirement villages and old age homes. And this is before the effects of higher interest rates and the National Credit Act fully come to the fore.
Sunday Times
Sunday, July 29, 2007 10:16:00 AM
http://www.netassets.co.za/personalfinance/personalfinance.asp?websitecontentitemID=69054