Gupta bonanza!

2013-05-12 14:00

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Estate benefiting from low valuation.

The super-rich Gupta family has received a property tax bonanza on their luxury R26.5?million estate that other homeowners could only dream of.

City Press has established that the Guptas’ 6?000m² homestead in Saxonwold, northern Joburg, has been valued for property taxes at less than a third of the R26.5?million the controversial family have poured into the property.

And, city valuation records show, not only are they paying taxes on a fraction of the property’s value but the valuation has dropped significantly from 2008 when the last citywide valuation was done.

They are also not alone.

Experts say that a fortune in potential local tax revenues is falling through the net because city valuations on the properties of the super-rich often don’t come close to their true value.

The revelations come at a time when most property owners are preparing for at least a 5.3% increase in their rates bill, when the new valuations come into effect in June.

City and property records paint an enigmatic picture of this property held by the Guptas, along with others, in a company called Islandsite Investments One Hundred and Eighty.

Their property is a palatial compound that includes its own back yard cricket pitch, tennis courts, a large swimming pool, manicured grounds and four mansions where the extended family live, as previously reported by The Sunday Times.

In 2005, they bought two erfs – one on Cotswold Drive and one on Northwold Drive – for R10.5?million in an apparent cash transaction, deeds office information shows.

Two years ago, they took out a bond from the India-based Bank of Baroda for R16?million on the property, now a single estate.

Back in 2008, and before the family’s R16?million splurge, city records reveal that the Northwold and Cotswold properties were valued by the city at R6.02?million each.

Five years later, the Guptas have had a surprising tax break: the Northwold Drive erf is now valued at R3.3?million and the Cotswold erf is down to R5.4?million.

Combined, they are worth more than R3?million less than their value five years ago.

The difference between the valuation and if it had been valued at close to what the Guptas have put in to the property is about R100?000 a year in property taxes.

The family also owns another property on Saxonwold Drive, which has also seen its official valuation fall from R9?million (which matched the original purchase price) to R7?million in the latest valuation.

Mark de Klerk, a property valuator with Mills Fitchet in Gauteng, said: “I have noticed that the value of the Gupta properties has dropped significantly.

At 1 Saxonwold Drive, the value dropped from R9?million to R7?million (22%) and the property on Northwold Drive from R6.02?million to R3.33?million (44%).”

He said he could understand some decline because of economic conditions but he was unable to give an accurate assessment of the value of the Gupta estate without physically inspecting the property himself to observe finishes and other qualities.

Of 20 recent sales in the area, the most expensive was for R9.5?million – for a property less than half the size of the Gupta estate.

Property-evaluation expert Phillip Mills said municipal property evaluations were usually based on assumptions that resulted in many properties in Joburg being undervalued.

He said the city was losing a fortune as a result.

“Those numbers (evaluations on the Guptas) don’t match the property prices in that area and what those houses seem to have cost the purchaser,” said Mills.

He said he had experienced undervaluations of as high as 66% on some properties.

The founder of the Johannesburg Advocacy Group (JAG), Lee Cahill, said: “That is definitely below the curve. Properties do get valued lower than they should be, but not like this. I do find this one concerning because that is an affluent area.”

The City of Johannesburg said in a statement that if there were objections to the valuations on the properties, they should have been filed by May?3 and any challenges after this date could not be entertained.

The city said it could not divulge “personal account information”.

Gary Naidoo, a spokesperson for the Guptas, said he could not provide any response as he could not get hold of the family.

“The family is away at a wedding and I am unable to contact them,” he said

Other luxury properties in the Gupta empire

Deeds office records show the Guptas’ Islandsite One Hundred and Eighty company also owns a basket of other top-end properties.

These include:

»?A Constantia property widely reported as having belonged to Mark Thatcher, the son of the late British prime minister, although official records don’t reflect this. The 8?000m2 property was bought in 2005 for R17?million;

»?An Umhlanga, Durban property bought for R5.3?million in 2005 and which also has a R16?million bond registered against it;

»?Two units in Thibault House in central Cape Town bought for R2.8?million with a bond of R24?million registered to them, according to deeds office records; and

»?Other Randjespark, Joburg properties that appear to be commercial developments with bonds of well over R20?million on properties initially purchased for more than R20?million

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