The Urban Development Zone
The
Urban Development Zone (UDZ) is a tax incentive administered by SARS, and aims to encourage private sector-led residential and commercial development in inner-city areas with developed public transport facilities.
The Minister has recently announced a continuation of the tax incentive by five years until 31 March 2030.
How does it work?
The UDZ allows businesses which fall within its area to benefit from significant tax savings for building development which fall into the following categories:
- The erection, extension or improvement of or addition to an entire building;
- the erection, extension, improvement or addition of a part of a building representing a floor area of at least 1 000 m²;
- the erection, extension or improvement of or addition to low-cost housing; and/ or
- the purchase of such a building or part of a building directly from a developer.
Do you benefit?
To find out how you may benefit from this incentive, visit the
SARS dedicated UDZ page.
- The requirements that have to be complied with before claiming a deduction;
- the costs that can be claimed;
- the amounts that can be deducted;
- the documentation required;
- the position of developers and buildings located on land owned by third parties; and
- a
UDZ calculator
which can be used to determine the amount that may be deducted.
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If you are a lessor/ landlord: Refer to paragraphs 2.3 and 2.4 of the
Guide to the Urban Development Zone Allowance. This Guide contains valuable information about the incentive and could be of assistance to you in other areas as well.
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How can I claim the allowance in my return?
Refer to page 65 of the
Comprehensive Guide to the ITR12 Income Tax Return for Individuals for information.
Please note
The eligibility to apply for the Urban Development Zone tax incentive benefit was extended from 31 March 2025 to 31 March 2030. The City awaits direction from SARS and National Treasury about the steps to follow in requesting for an extension of the geographical area.
The previous promulgation of the
Taxation Laws Amendment Act (No 22 of 2012) with amendments in 2013 and 2023, extended the validity period for the Urban Development Zone to 31 March 2025. The recent announcement by the Finances Minister will still realise in the amendment of the Act to illustrate the extension as announced, to 31 March 2030.
The City's application to geographically extend the Urban Development Zone was historically approved by the Minister of Finance and included significant portions of Maitland, Parow and Oakdale. This extension complemented efforts by the Mayor's Urban Regeneration Programme and the historically established Voortrekker Road Corridor Improvement District to boost private sector investment in these areas.
The
Government Gazette, number 36195, published 27 February 2013
includes lists of properties by Erf number that fall into Urban Development Zones.
The original
Government Gazette, number 26866, published 14 October 2004 includes the original delineation.
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