In Episode 18 of The Property Buyers Guide, Justina Hamupembe, also known as YourHomeGirl, sits down with Ms. Loide Hamutumwa from The Namibia Revenue Agency (NamRA) to discuss the tax laws and financial obligations involved in purchasing property.
Whether you’re buying for personal use or investment, understanding tax implications can help you avoid surprises and plan your finances effectively.
Q1: What are the key taxes associated with purchasing property?
Loide:
When purchasing a property, the following taxes apply:
Transfer Duty – A tax payable to NamRA under the Transfer Duty Act No. 14 of 1993. It is charged on the value of the property and must be paid when ownership is transferred to the buyer.
Stamp Duty – A tax under the Stamp Duty Act No. 15 of 1993, applied to legal instruments such as property transfer documents.
Income Tax – Under the Income Tax Act No. 24 of 1981, any profit earned from selling a property or rental income is subject to income tax.
VAT (Value Added Tax) – Payable under the VAT Act No. 10 of 2000, applicable to property sales if the seller is VAT-registered (for example, a developer selling newly built homes).
Q2: What are the tax implications for buying a home for personal use versus investment?
Loide:
Personal Use:
- If the property is purchased as a primary residence, there are no recurring tax obligations aside from transfer duty and stamp duty.
- If the property value is below N$1.1 million, no transfer duty is payable.
- If an employer provides housing assistance, part of the monthly installment may be tax-exempt under Section 16A of the Income Tax Act (if the employer has an approved scheme).
Investment Property (Rental or Airbnb):
- Rental income is subject to income tax, and investors must declare rental income and expenses.
- Certain expenses like maintenance, rates, and repairs can be deducted before tax.
- If the property is owned by a company, the corporate tax rate applies instead of individual tax rates.
Q3: When and how should new property owners submit tax returns?
Loide:
For Personal Use:
- Homeowners must submit their annual tax return and declare under Schedule 24 that they reside in the property.
For Investment Properties:
- Owners must declare rental income under Schedule 9 (Rental Schedule) in their annual tax return.
Deadlines:
- Tax returns must be submitted on time as per the law to avoid penalties.
Tip: If you’re unsure about any tax obligations, NamRA encourages property owners to send queries to legalservices@namra.org.na for a constructive tax ruling (s).
Conclusion
Justina wrapped up the episode by stressing the importance of understanding property-related taxes. Whether you’re a homeowner or investor, knowing your tax obligations helps you plan better and avoid unexpected liabilities.
Stay tuned for more expert insights next week on The Property Buyers Guide!
