South Africa’s latest tax regulations for the listed property sector, the South African Real Estate Investment Trust (SA Reit), is set to be implemented from May 1.

However, early implementation of the legislation, which was formally published by the National Treasury in October and initially meant to be effected in April, would be allowed, the JSE said last week.

The JSE’s now-published listing requirements would facilitate the adoption of SA Reit by property loan stocks companies (PLSes) and property unit trusts (PUTs).

The companies showing compliance with all the requirements and committing to the ongoing obligations by July 1 would qualify to list on the SA Reit board of the JSE, said SA Reit Association Committee chairperson and Growthpoint Properties executive director Estienne de Klerk.

To list under SA Reit and qualify for the new tax dispensation, companies would be required to hold assets of R300-million, pay 75% of distributable income a year, maintain a loan-to-value ratio of below 60% and generate 75% of its revenue from rentals.

The firms would be required to have risk-monitoring special measures in place and must not enter into derivative instruments outside of normal business, the JSE added.

A SA Reit company could deduct all distributions paid to shareholders or linked unitholders as an expense and it would not be required to pay capital gains tax on any profit from the sale of a property.

Shareholders were not required to pay securities transfer tax on buying or selling shares. Foreign shareholders would be taxed 15% or the applicable double tax agreement rate as of January 2014.

While South African investors would not be levied the 15% dividends tax against received distribution, they would be taxed when the distribution was included in their taxable income.

“Because the SA Reit dispensation provides many benefits, the foremost of which is tax certainty, it is likely that all qualifying South African listed property entities will make application to the JSE to become a Reit,” De Klerk said in a statement.

Currently, there were 35 JSE-listed property firms, comprising six PUTs and 29 PLSes.