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Asked on 2010-04-13 22:58 by: Marty
Question category: Buying or selling a house
I have 400k available in my Access homeloan account, and want to purchase a buy-2-let flat.
Seeing that the funds are readily available, can I tell the agent that it’s a “cash deal”, to negotiate a lower price ? Once I sign an “offer to purchase”, do I have to transfer the full amount & do I transfer it to the agent or their attorneys ?
I believe expenses (interest, maintenance ect.) can only be claimed for 6 yrs ; what expenses are allowed from year 7 ?
Seeing that the funds are readily available, can I tell the agent that it’s a “cash deal”, to negotiate a lower price ? Once I sign an “offer to purchase”, do I have to transfer the full amount & do I transfer it to the agent or their attorneys ?
I believe expenses (interest, maintenance ect.) can only be claimed for 6 yrs ; what expenses are allowed from year 7 ?
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Answers:
Answered on 2010-04-15 21:25 by: liz status: Comfy ( $467 000 )
Vote 
Let’s quickly look at your question one-by-one:
1) Telling the agent that it’s a cash deal:
I can think of no reason why you can’t tell the agent this, as long as you are 100% sure you will have the funds available at 24h notice. Just check with your bank, as I know some banks, eg Nedbank, have tightened up controls w.r.t. releasing funds in an access bond. You may need to go through an approval process again.
2) Transferring the funds:
If your offer to purchase is accepted by the seller, you usually have to transfer a deposit of about 10% to the transferring attorney of the seller. The remainder is only payable upon transfer.
3) Tax treatment of expenses:
I’ve never heard of the running expenses not being deductible after 6 years. According to SA income tax law any expense incurred in the production of a business income (and renting out this property is a business endeavour), is deductible from that business income. You only need to prove that the expenses were actually incurred and with the sole purpose of producing the rental income. Take care, improvements to the property are usually expenses of a capital nature and not applicable to income tax (only to capital gains tax, should you sell the property later).
1) Telling the agent that it’s a cash deal:
I can think of no reason why you can’t tell the agent this, as long as you are 100% sure you will have the funds available at 24h notice. Just check with your bank, as I know some banks, eg Nedbank, have tightened up controls w.r.t. releasing funds in an access bond. You may need to go through an approval process again.
2) Transferring the funds:
If your offer to purchase is accepted by the seller, you usually have to transfer a deposit of about 10% to the transferring attorney of the seller. The remainder is only payable upon transfer.
3) Tax treatment of expenses:
I’ve never heard of the running expenses not being deductible after 6 years. According to SA income tax law any expense incurred in the production of a business income (and renting out this property is a business endeavour), is deductible from that business income. You only need to prove that the expenses were actually incurred and with the sole purpose of producing the rental income. Take care, improvements to the property are usually expenses of a capital nature and not applicable to income tax (only to capital gains tax, should you sell the property later).
