Question $120$ Marks

Nadia Jacobs is a single parent with four school going children under her care and her

salary was not enough for the size of her family. To supplement her salary, Gladys used

her savings to buy a house in the suburbs of Academia in Windhoek in $2008.$ She

added three bedrooms and two bathrooms to the house in order for her to receive

higher rentals. Since then, Nadia has been letting this house every year to students that

come to Namibia from Angola to study at the University of Namibia.

However, as from $2020$ Nadia has been finding it very difficult to find tenants for her

house due to the Namibian economy that was not performing well as a result of the

Covid$19$ Pandemic which negatively affected many countries all over the world. This

was worsened by the Angolan students who stopped coming to Namibia due to their

own financial challenges. Nadia has had periods where her house was vacant for $6$

months and this has been causing her severe financial challenges. One of her close

friends has advised her to sell the house and invest the money in an interest bearing

bank account offering interest rates of $9\%$ per annum. So in January $2021,$ Nadia took

the advice, started advertising her house and she eventually found a buyer willing to

buy the house for N$ $1200000\mathrm{.}00.$ Nadia is however unsure on whether she will be

taxed from the proceeds received from the sale of this house.

As a Namibian Taxation expert, Nadia approached you to seek professional advice on

the income tax implications of the proceeds she will receive from the sale of her house

should she sell it during the $2023$ year of assessment?

Required:

Advise Nadia Jacobs on whether she will be taxed on the N$ $1200000$ received from

the sale of her Katutura house should she decide to sell it$.$

Support your answer with relevant case law and legislation.