Page 3 - F6 Slides (CGT,TT,ET AND PT)

Primary residence exclusion

• here a natural person sells his private residence certain capital gains and

losses on the disposal of the primary residence (par 45(1)) must be

disregarded. Because the primary residence has to be situated in South
Africa, the primary residence exclusion is only available to South African

residents.

• The primary residence exclusion can also apply if the primary residence is

held by a special trust. In terms of the primary residence exclusion rule,
there are two possibilities: If the primary residence is sold for more than

R2 million, the first R2 million of the capital gain or loss should be

disregarded (the R2 million gain or loss rule – par 45(1)( a )).

• If the primary residence is sold for R2 million or less and a capital gain is
realised, the full capital gain is disregarded (the R2 million proceeds rule –

par 45(1)( b )).