Introduction
During the transfer of immovable property from the seller to the purchaser a number of documents are required by the Deeds office. These include the those listed below.
- Original deed of transfer (“title deed”) for the property.
- New deed of transfer drafted and signed by the conveyancer.
- Identity documents for the seller and purchaser.
- Power to transfer signed by the transferor in favour of the conveyancer.
- Proof of payment of stamp duty or an exemption thereof.
- Rates clearance from the local authority such as City of Harare.
- Capital Gains Tax clearance certificate.
In this article I look at the contents of a capital gains tax clearance certificate.
Capital Gains Tax (“CGT”)
This is a tax payable when the owner of certain specified assets, such as immovable property or shares in a company, are disposed of by the owner and he or she makes a capital gain. For example if the owner of an immovable property sells a property for $ 70 000 which he or she purchased at $ 50 000, and did not incur further deductible costs, his capital gain will be $ 20 000. CGT is a percentage of the capital gain. If for example the CGT rate is 20% then the CGT in the current example will be $ 4 000, being 20% of $ 20 000. I have previously written many articles on capital gains tax which are available online.
Contents of a capital gains tax clearance certificate
A CGT clearance certificate is issued in terms of section 31 of the Capital Gains Tax Act (Chapter 23:01). Some of the information on the certificate include the following:
- Certificate reference number.
- Transferor and transferee.
- Description of the asset.
- Date of acquisition.
- Reason for disposal.
- Value of the asset for CGT.
- ZIMRA officials signing the certificate.
- Date stamp
CGT reference number
This is the unique document number for the CGT certificate.
Transferor and transferee
A transferor is the person transferring a specified asset from himself / herself to another, for example a seller transferring to the purchaser. A transferee is the person to whom the property is being transferred, for example a purchaser. The tax identification numbers (“TIN”) for both the transferor and transferee are disclosed.
Description of the specified asset
In the case of an immovable property the description will be as per the title deed. For example, a certain piece of land in the district of Salisbury, called Stand Number 1 of New Suburb, measuring 2 001 square metres.
Date of acquisition
The date the immovable property was acquired by the transferee is included. This date is usually as per the Agreement of Sale.
Reason for disposal
Such reasons may include sale, donation, transfer from a deceased estate, etc.
Value of the property
The value of the property for CGT purposes is stated in both figures and words.
ZIMRA officials signing
The names and signatures of the ZIMRA officials signing the CGT certificate are included. These officials are usually the Revenue Officer and the Head of Office or Station.
Date stamp
The CGT certificate ought to have the ZIMRA date stamp.
Conclusion
The CGT clearance certificate is a very important document during the process of transferring an immovable property from the transferor to the transferee. The securing of the certificate signifies the end of the ZIMRA process and that the transferor has complied with CGT laws.
Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice.
Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), ACCA (Business Valuations) MBA(EBS, Heriot- Watt, UK) is the Managing Partner of Hofisi & Partners Commercial Attorneys, chartered accountant, insolvency practitioner, registered tax accountant and advises on deals and transactions. He has extensive experience from industry and commerce and is a former World Bank staffer in the Resource Management Unit. He chairs the board of a real estate company and was in 2024 appointed to the Council of Estate Administrators. He writes in his personal capacity. He can be contacted on +263 772 246 900 or ghofisi@hofisilaw.com or gohofisi@gmail.com. Visit www//:hofisilaw.com for more articles.
