Property Tax In South Africa – An Evaluation Of Current Practice

This study investigates the current practice with regards to property tax in South Africa. Reference is made to the legislative environment, property tax policy, valuations practice and the actual tax being collected in different municipalities and types of property. Emphasis is given to metropolitan municipalities and the influence on commercial property as investment class real estate. The findings of the study is that the legislative environment underpinning the property tax practice is considered to be well structured and a good basis for the purpose it was implemented. There are, however, some shortcomings in the implementation of this by individual municipalities. It was furthermore found that the average taxation of commercial property in South Africa appears to be at a sustainable level, however, there were some significant changes in property tax collected since the implementation of the Municipal Property Rates Act of 2004 and also that there are significant differences in tax treatment by different municipalities and for different property types. Lastly it was also found that there are significant shortcomings in valuations practice for tax purposes, with specific reference to mass appraisal methodologies.