How much you could save on a R1 million bond by paying in your tax refund – and home upgrades that create value

South African taxpayers are beginning to receive their tax rebates from the South African Revenue Service (SARS), with the additional cash giving budgets a boost ahead of the expensive holiday season.

While getting money back from SARS is always a cause for celebration, for homeowners, it makes more sense to invest any tax refund in your home and leverage further savings, even if this doesn’t seem very exciting right now, said Gerhard Kotzé, managing director of the RealNet estate agency group.

“The first thing homeowners should consider doing with a tax refund is to use it lower the capital portion of their home loan because this could help them save thousands of rands in interest charges over the life of the loan – especially if they make a habit of doing it every year.

“If you had a 20-year home loan of R1 million at 7% interest, for example, just one extra lump sum payment of R2,400 this year would cut the loan term by a month and save you almost R7,600 worth of interest,” he said.

However, as a homeowner, you may want to spend your tax windfall to help fund something more immediately enjoyable. In this case, Kotzé said that good choices include:

  • A second bathroom to make life easier now and lift the value of your home when it is time to sell;
  • A new coat of paint that will keep your future maintenance costs down;
  • Improvements to your security system that will lower your short-term insurance premiums; and
  • Roof insulation to help keep your electricity bills down.

What South Africans are upgrading 

Security and self-sufficiency have become critical features for homebuyers, said the Seeff Property Group.

“New houses are increasingly offering excellent security and features which reduce energy usage. Although these can be quite costly, there are accessible options which will improve your quality of life while ticking the value-adding boxes for prospective buyers should you decide to put your home up for sale,” it said.

Seeff said that the five home improvements that buyers are increasingly looking for are:

  • Security – This includes protective boundary walls, electric fencing, burglar bars and security gates. Additionally, buyers now want an added layer of protection such as an alarm system, cameras, beams in the garden and good exterior lighting. Upgrading the security of your home provides safety for your family and adds value to your home, said Seeff.
  • Energy-saving lighting – LED lighting is now necessary for homes as they use significantly less power. Given that power outages are here to stay for the near future, there is now more demand for homes with lighting which use rechargeable globes so that the lights can stay on when the power is out and reduce electricity usage at the same time.
  • Gas for cooking and heating – A gas stove helps reduce the reliance on electricity. Woodburning fireplaces offer cost savings and are regarded as renewable energy usage. Ceiling insulation is another desirable feature as it helps keep the home cool in summer and warm in winter, thereby reducing reliance on electricity for air-conditioning and heaters.
  • Solar heating – A solar geyser is an excellent investment as it will reduce your power usage and add value. Solar panels can take care of all your household hot water needs. “You could also use it to heat your swimming pool which will add further value. While a full solar heating system can be costly, you can start small and build on it.”
  • Backup power system – A backup power system can keep necessities such as the internet and computers on during a power outage. “Generally, systems range from a basic inverter system that can power your internet, laptop and television for a few hours to a sophisticated 3,000-5,000 watt system, fully integrated with your home distribution system,” Seeff said.
  • Rainwater harvesting – A substantial amount of water can be harvested from your roof by modifying your home’s guttering to direct rainwater into tanks. This water can feed all non-potable needs such as watering the garden, washing cars, cleaning outside, and swimming pools.
    “You could also instal a feed to your toilets or other high water users, but you must install a filter to avoid potential damage to your sanitaryware. The water will also need to be treated.”

Read: New water and electricity billing system for Joburg.