Property Reminders for 2012
Category Property News
REPORT COMPILED BY DA CONSTA INC ATTORNEYS - Annabelle J. da Costa (LLB) DIRECTOR
SOME IMPORTANT REMINDERS FOR 2012
TRANSFER DUTY CHANGES
Last year we sent out an email newsletter notifying everyone that the transfer duty amounts payable to the South African Revenue Services when purchasing a property had been reduced. Please remember, the transfer duty costs are now the same if you are a private individual or an entity such as a Company, Close Corporation or a Trust.
The following rates apply:
| Property Value | Tax |
| R0 – R600 000 | 0% |
| R600 001 - R1 million | 3% on the value over R600 000 |
| R1 million – R1.5 million | R12 000 plus 5% on the value above R1 million |
| R1.5 million and above | R37 000 plus 8% on the value above R1.5 million |
If you have any difficulties calculating transfer duty on a purchase price please don’t hesitate to contact us. We have attached a cost schedule to this email for ease of reference.
PRIMARY RESIDENCE TAX BREAK
You may recall, we also sent out an email in 2010 notifying clients of the “tax break” given to persons who hold their primary residence in a Trust, Close Corporation or Company of which they are a member, director, shareholder or Trustee, as the case may be.
Government is giving persons an opportunity to transfer their properties into their own names without triggering capital gains tax or transfer duty. This could potentially save clients thousands as the capital gains payable by a private individual when they sell their primary residence is far less than the amount payable by an entity. We suggest that clients consult their tax advisors before deciding whether or not to go this route.
One must note that there are certain conditions which must be met in order to qualify, namely:
- The property must be the members’ (or directors, shareholders or Trustees as the case may be) primary residence (i.e they must have ordinarily resided on the property);
- The members must have used that property mainly for domestic purposes since February 2009 ;
- The members must resolve to take steps to liquidate or wind up the CC or Company within 6 months of date of disposal, or in the case of a Trust the Trustees must agree to revoke the Trust; and
- The disposal takes place before 31 December 2012. We are currently not aware of any extension of this date.
The main costs involved in this transfer process will thus be the attorneys’ conveyancing charges and these will be charged based on the current market value of the property.
If there is currently a bond registered over the property this will need to either be settled, cancelled and a new bond registered or a substitution of debtor registered. We suggest that you chat to your bank to ascertain if your bank will permit a substitution of debtor as this is far cheaper than cancelling a bond and registering a new bond.
