Question 3 Capital Gains Tax [22]

Kitty Softpaws owns two properties and a number of other items. Since she plans to emigrate, she sold both properties, and a number of the other items. Kitty approached you to calculate the amount that should be included in his taxable income, if any, for the year of assessment ending 28 February 2023. (Provide reasons for any amounts excluded from the capital gains calculation).

The following details are available:

Property 1

Kitty bought the house she is currently living in on 10 November 2010. She paid or R1 850 000. The transfer fees on the property of R19 2500. Kitty managed to sell the property for R13 100 000 on 15 December 2022. Kitty had a tennis court built in 2012 for R105 000 and a swimming pool for R650 000, however when her last child was married, she converted the pool into a lapa with a firepit at a cost of R35 000. Se incurred the following expenses in the current year with respect of this property:

Replace of broken windows over the years R5 500

Garden services R1 500 p.m.

Insurance R6 000 p.a.

Sales commission R710 000

Painting the roof to improve the sales price R37 000

Property 2

Kitty bought an apartment to earn rental income about 5 years ago. She bought it for R1 250 000 but unfortunately the neighbourhood deteriorated, and she only sold it for R 980 000 on 10 July 2022. The sales commission was R54 000.

Other assets sold

Asset Purchase Price Sales Price

Ford Ranger Bakkie R 500 000 R 375 000

Motorboat of 6m and 550kg R 175 000 R 180 000

Learjet measuring 25m and 850kg R14 500 000 R17 800 000