3 ways to reduce your CGT liability (Residential Zimbabwe)

1. Keep records (duh)

Your first dollar is saved when you buy the property. When talking to your consultant (legal, tax or other) make sure to provide as much detail about the property as possible. I am not just talking about the title deed number and previous agreements of sale.

I am talking about the details around the cost of improvements, alterations or additions you’ve made to the property. The cost of those improvements are deductible in order to reduce your tax liability. Section 11(2(b)) of the Capital Gains Tax Act. Make sure to have the receipts and other supporting documents lest the commissioner don’t believe you.

Slight tangent, for extensions and other notable improvements, make sure your consultant recognises them in the description of the property within the agreement of sale. That difference in descriptions between the old agreement and new agreement helps substantiate your deduction claim.

2. Make ZIMRA pay the commission

As long as your commission fees are within the standard range of 5-7%, you should push agent commissions to ZIMRA. Commission fees and other expenses directly connected to the selling of a property (including valuation fees if requested by the commissioner) are part of selling expenses and are allowable deductions under section 11(2(d)) of the Capital Gains Tax Act.

3. There’s an inflation allowance

Whilst not measuring up to Zimbabwe’s average inflation rates in any given year, a general 2.5% inflation allowance per year is granted on costs to the extent of your holding period (the time you’ve owned the property/improvement). Claim it.

Very simple but often overlooked. Till Next Time

— Ntandoyenkosi Mahonde
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