Section 13 quat was added to the Income Tax Act back in 2003. This provision is time-limited, applying only to buildings put into use for the first time before March 31, 2025.

The goal of this incentive is to encourage urban renewal. It benefits landlords and property owners who revive rundown or outdated properties in designated areas, making them available in the market again. These individuals or companies are eligible for one of two types of capital allowances:

1. Refurbishment of existing buildings: This offers a 20% straight-line depreciation allowance over five years, provided the original structural or exterior framework is preserved. Any incidental extensions or additions also qualify.

2. Construction of new buildings or extension of existing ones: This allows for an 11-year write-off period, with 20% claimable in the first year and 8% of the cost in each of the following 10 years. The deduction can be claimed from the assessment year in which the building is first used.

These eligible buildings can be commercial or residential. Special provisions apply to low-cost residential units, adjusting the allowance accordingly. To qualify, a taxpayer must obtain a certificate from the local municipality confirming the building's location in an urban development zone. Maps defining these zones were issued when the allowance was initially introduced.

Taxpayers can claim these allowances on buildings they have constructed, improved, or purchased. However, developers who acquire properties as trading stock are not eligible. The allowance is reserved for taxpayers who incur the expenditure, intend to keep the building, and meet specific conditions, including:

- Ownership of the building or part thereof
- Sole use of the building for the taxpayer's trade
- Location in an urban development zone
- Erection of building improvements covering the entire building or at least 1000 square meters
- Submission of relevant details and certificates with the tax return for the claimed year

The section has been updated to accommodate taxpayers purchasing qualifying buildings from property developers. Specific requirements must be met by both the developer and purchaser for the allowance to be granted, which can be obtained upon request. # Stratfinn #SARS #13quat #property #taxincentive