CJW (Pty) Ltd buys a block of 20 apartments on 1 January 2015. The apartments are not new. It spends R1 million on the improvement of each apartment. After all the improvements have been done the company sells the apartments to individuals for R4 million each, including Value Added Tax (VAT). The selling price of each apartment is made up as follows:
Cost of apartment (excluding improvements): R3 000 000
Cost of improvements of each apartment (new and unused): R1 000 000
Mr. H buys five of the apartments and lets them all to tenants for R12 000 each per month.
Mr H can claim the residential allowance per apartment as follows:
R4 million x 5 units x 30% = R6 000 000 (deemed cost of improvements)
Section 13 Sex allowance: R6 000 000 x 5% = R300 000 per annum
If CJW (Pty) Ltd had constructed the units and sold them to Mr H for R4 million each, as new and unused, Mr H’s residential allowance per apartment would be:
R 4 million x 5 units x 55% = R 11 million
Section 13 Sex allowance: R11 million x 5% = R550 000 per annum
If Mr H had only let 3 units in the first year he would not be entitled to the allowance. He would only be entitled to claim the allowance in the first year that 5 units were used by him or his trade. The allowance is not apportioned for part of a year.
The tokens can be redeemed for share certificates after 5 years from the date of the ICO. The rationale behind the delay is to ensure adequate time to buy all the physical assets (e.g. residential property) but most of all to ensure that the investment of Zabercoin holders is taking care of in a responsible and professional manner by curbing and controlling administrative/secretarial costs as effectively as possible. The tokens can be freely bought and sold at online exchanges. After the share certificate has been redeemed it can be sold every ten years thereafter by which the seller will carry the administrative/secretarial costs.
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