Are REIT dividends taxable in South Africa?
received from a REIT is included in the taxable income of an individual and is taxed at the individuals marginal tax rate.
Do you have to pay taxes on REIT dividends?
The majority of REIT dividends are taxed as ordinary income up to the maximum rate of 37% (returning to 39.6% in 2026), plus a separate 3.8% surtax on investment income. Taxpayers may also generally deduct 20% of the combined qualified business income amount which includes Qualified REIT Dividends through Dec.
Who is exempt from dividend tax in South Africa?
Dividends are tax exempt if the beneficial owner of the dividend is an SA-resident company, SA-retirement fund or other prescribed exempt person.
Are foreign dividends taxed in South Africa?
Most foreign dividends received by individuals from foreign companies (shareholding of less than 10% in the foreign company) are taxable at a maximum effective rate of 20%. No deductions are allowed for expenditure to produce foreign dividends.
What are the benefits of REITs in South Africa?
Advantages of Investing in REITs in South Africa
REITs own a variety of different types of real estate property, so when you invest in a REIT, you are effectively diversifying across the various real estate sectors. This diversification helps protect you from any sudden downturns in a particular market sector.
How do I avoid taxes on REIT?
If you own REITs in an IRA, you won't have to worry about dividend taxes each year, nor will you have to pay taxes in the year in which you sell a REIT at a profit. In a traditional IRA, you won't owe any taxes until you withdraw money from the account.
How do REITs avoid double taxation?
Unlike many companies however, REIT incomes are not taxed at the corporate level. That means REITs avoid the dreaded “double-taxation” of corporate tax and personal income tax. Instead, REITs are sheltered from corporate taxes so their investors are only taxed once.
How is REIT income taxed in South Africa?
In this way the investor is taxed and not the REIT. received from a REIT is included in the taxable income of an individual and is taxed at the individuals marginal tax rate.
How much foreign income is tax free in South Africa?
From 1 March 2020, however, only the first R1. 25 million of foreign employment income that meets the conditions explained below will be exempt from tax. Our estate and tax planning experts remain abreast of the tax planning conditions that affect your long-term wealth.
What is the 183 day rule in South Africa?
You qualify as a South African tax resident. You perform employment services outside South Africa on behalf of an employer (it does not matter if the employer is South African or foreign) You spend at least 183 full days physically outside of the borders of South Africa in any 12-month period.
Are distributions from foreign trusts taxable in South Africa?
You receive a distribution comprising taxable income from the trust, eg realised gains, interest, foreign dividends or property rental. The distribution will be subject to the relevant taxes in your hands. The trust earns taxable income or realises gains.
What is the new expat tax law in South Africa?
The amendment requires South African tax residents abroad to pay South African tax of up to 45% of their foreign employment income which exceeds the threshold of R1. 25 million.
Do expats pay taxes in South Africa?
South Africa has a residence-based tax system, which means residents are, subject to certain exclusions, taxed on their worldwide income, irrespective of where their income was earned. By contrast, non-residents are taxed on their income from a South African source.
How do REITs work in South Africa?
Owning shares in a REIT allows investors to earn a part of the income produced through the underlying “bricks and mortar” without directly owning and managing the property. There are many other benefits to investing in REITs, including their regular income stream and special tax considerations. How to invest in REITs?
How are REITs regulated in South Africa?
Since 2013, REITs are regulated by the JSE listing requirements and rules. The REIT's directors are responsible for the ongoing compliance with the JSE listing requirements and the Companies Act. A REIT that is a South African resident for income tax purposes qualifies for the REIT tax dispensation.
How much do you need to invest in REITs in South Africa?
“Firstly, they give you exposure to the property sector without having to invest directly. This means you can invest as little as R5 in a company like Growthpoint Properties, which has interests in 525 properties in SA and Australia with a total value of more than R100bn.
How much tax do you pay on REIT dividends?
However, qualified dividends are taxed based on the shareholder's individual tax bracket, which could be 0%, 15%, or 20%. For example, if a shareholder receives $2,000 in dividends from a REIT and receives the 15% qualified dividend tax rate, they will pay $300 in taxes.
Do you pay tax on REIT income?
A REIT is taxable as a regular corporation, but is entitled to the dividends paid deduction. Therefore, a REIT does not pay federal income tax on net taxable income distributed as deductible dividends to shareholders. Net income from foreclosure property is taxed at 35 percent.
What is the 90% rule for REITs?
How to Qualify as a REIT? To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.
Is it bad to hold REITs in a taxable account?
REITs and REIT Funds
Real estate investment trusts are a poor fit for taxable accounts for the reason that I just mentioned. Their income tends to be high and often composes a big share of the returns that investors earn from them, as REITs must pay out a minimum of 90% of their taxable income in dividends each year.
Is it OK to hold REITs in a taxable account?
This makes them a great type of dividend investment to hold in tax-advantaged retirement accounts like traditional IRAs, Roth IRAs, and 401(k)s. In this scenario, you wouldn't need to keep track of the cost basis from ROC. It's also okay to own REITs in taxable accounts.
Are REITs tax friendly?
As real estate vehicles, REITs are able to claim tax deductions for depreciation and amortization, which reduce the REIT's net taxable income but do not reduce its cash.
How to invest in REITs in South Africa?
The only way to invest on the JSE is via an authorised JSE stockbroker. A list of stockbrokers can be found on www.jse.co.za and then click on 'find a stockbroker' and you will find a list of stockbrokers in your area who will help you to open an account and you can begin your investment journey with the JSE.
How are investments taxed in South Africa?
DWT is tax payable on dividends received or accrued from South African-listed companies or dual-listed non-resident companies. DWT, which is levied at a flat rate of 20%, is paid directly to Sars by the company before the balance of the dividends is paid to the investor.
How much tax do I pay on interest earned in South Africa?
The first R 23 800 of interest is tax free for taxpayers under 65 years, while the threshold amount is R 34 500 for those over 65 years. After that, the difference is added to your income and taxed at your marginal rate, according to the tax bracket you fit into.
