Well, here we are half way through the year with the property market still in great shape and all systems go for a great second half. The economy is growing at more than 4 percent a year, inflation is still under control, interest rates are unlikely to be raised much if at all, and consumer and business confidence remains high.

SA has gained more than 20 000 successful new businesses in the past year, household debt is relatively low and the buying power of the rapidly expanding black middle-class is plain to see.

So, barring a major international economic shock, homeowners and estate agents have a lot to smile about – which makes the current downbeat mood in the Western Cape difficult to fathom.

Personally, I think it's because the market in that region is still taking its cue from the presence, or absence, of foreign buyers - who are understandably much less in evidence now than when the rand/dollar exchange rate was 12 to 1.

The reality is that even in their heyday, foreign buyers accounted for at most 10 percent of sales in certain, select areas – and that sellers and agents who are holding their breath for another foreign influx could be missing the really big boat: the rising demand from the increasing number of fully-empowered, very wealthy black executives, professionals, politicians and public servants within SA.

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Homeowners who planned to upgrade but were caught off-guard by spiralling property prices, may now have another opportunity to do so, because the prices of middle range properties are rising faster than those of houses in the luxury category.

Absa figures show that prices in the middle segment of the market – homes of 80 to 400sqm and priced up to R2,2-million – are still rising at the rate of about 24 percent a year, while prices of homes that cost more than R2,2-million are rising at an average rate of only about 11 percent a year.

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South African residents are coming to grips with Capital Gains Tax (CGT) legislation that allows them a R1-million exemption when they sell their primary residence, but the situation for non-residents is murky.

Many will not, it appears, qualify for the R1-million exemption when they sell a property in SA – even if it has been their “primary residence” in this country.

The question has arisen because, in terms of a recent amendment to the Income Tax Act, buyers or conveyancers will in future have to withhold a portion of the sale price from a non-resident seller as a CGT pre-payment, and they will obviously need to know what exemptions, if any, apply in order to make the correct deductions.

Andrew Duncan, a tax lawyer at specialist financial compliance firm Duncan-Barrow & Associates, notes that draft CGT guidelines compiled by the SA Revenue Service (SARS) state that local homes bought by non-residents with the purpose of living in them while visiting the country will qualify as primary residences only as long as the owners have no primary residences offshore.

Non-residents with residences in their own countries could, however, also qualify for the      R1-million CGT exemption on the sale of their SA property if their foreign property is let to tenants for the duration of their stay in South Africa.

“These distinctions are of course illogical. It is completely irrelevant whether or not non-residents own homes in their own countries, or elsewhere. Our Act does not apply outside South Africa to non-residents and, in my view, the test should rather be whether or not non-residents own more than one SA residence.”

It will be interesting, he says, to see how the process is dealt with in practice. “I have no doubt that from an equitable point of view a non-resident is as much entitled to the exemption as a resident, both being subject to CGT.

“But as it stands, if you are a non-resident and want to claim the R1-million exemption on the sale of a local property, you had better not be living in a primary residence off-shore.”

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