Transfer of Property from a Company, CC or Trust into the Name of an Individual
” In the latter part of 2009, Dykes, van Heerden Inc. sent a Newsflash about the window of opportunity which would be opened in regard to the transferring of certain immovable properties from Close Corporations, Companies and Trust to individuals.
They had the pleasure of advising that SARS has now passed the necessary legislation and approved the necessary forms to enable such transfer to now take place.
Due to the large saving on Capital Gains Tax and on dividends tax and STC (secondary taxation on companies), Dykes, van Heerden Inc. strongly suggest that clients who own Close Corporations and Companies which own immovable property make use of the opportunity to transfer such properties to their individual names. In the instance of those clients who own trusts which own immovable property, consideration should also be made as to whether one should take advantage of this window of opportunity although the considerations are less strong in the case of a trust.
In the case of a Close Corporation and Company one saves paying dividends tax or STC and no Capital Gains Tax in paid in respect of the transfer which means that when Capital Gains Tax is eventually paid there will be a large saving in regards to the same. When one considers that the Capital Gains Tax payable by a Company or Close Corporation is 14% whereas the amount payable by an individual is between 0% and 10% one can see the dramatic savings which can be effected in regard to Capital Gains Tax. As dividends tax is presently 10% a further large saving can be effected by utilizing the window of opportunity.
Unfortunately the previsions relate only to certain specified instances and not to all immovable property which is owned by Companies, Close Corporations or Trusts. The following minimum requirements must be presented before such a transfer can take place:
For Companies and Close Corporations
- The transferee (the Purchaser) must personally and ordinarily have resided in the property since 11 February 2009 and have used it mainly for domestic purposes and will continue to do so until the date of registration of transfer of the property;
- The Purchaser together with his/her spouse must directly hold all the share capital of the Company or the member’s interest of the Close Corporation as from the 11th February 2009 to the date of registration of the property into the name of the Purchaser;
- The property must be less than 2 hectares in extent;
For Trusts
- The Purchaser must personally and ordinarily have resided in the property since 11 February 2009 and have used it mainly for domestic purposes and will continue to do so until the date of registration of transfer of the property;
- The property must be less than 2 hectares in extent;
- The Purchaser is the person who deposed of that residence to the trust by way of a donation, settlement or other disposition or who financed all the expenditure relating to such Property which was actually incurred by the trust to acquire and to improve the residence.
The window of opportunity is available until 31 December 2011.
Normal transfer fees, bond cancellation fees and bond registration fees will apply and one will have to arrange with the necessary financial institution to effectively ” transfer ” the bond from the relevant entity to the natural person who takes over the property.
‘ Please note that this is meant to be a comprehensive exposition on the effects of Section 9(20) of the Transfer Duty, Act 1949 and you are strongly urged to take legal advice before making any decisions in regard to the same. ‘ ”
” In the latter part of 2009, Dykes, van Heerden Inc. sent a Newsflash about the window of opportunity which would be opened in regard to the transferring of certain immovable properties from Close Corporations, Companies and Trust to individuals.
They had the pleasure of advising that SARS has now passed the necessary legislation and approved the necessary forms to enable such transfer to now take place.
Due to the large saving on Capital Gains Tax and on dividends tax and STC (secondary taxation on companies), Dykes, van Heerden Inc. strongly suggest that clients who own Close Corporations and Companies which own immovable property make use of the opportunity to transfer such properties to their individual names. In the instance of those clients who own trusts which own immovable property, consideration should also be made as to whether one should take advantage of this window of opportunity although the considerations are less strong in the case of a trust.
In the case of a Close Corporation and Company one saves paying dividends tax or STC and no Capital Gains Tax in paid in respect of the transfer which means that when Capital Gains Tax is eventually paid there will be a large saving in regards to the same. When one considers that the Capital Gains Tax payable by a Company or Close Corporation is 14% whereas the amount payable by an individual is between 0% and 10% one can see the dramatic savings which can be effected in regard to Capital Gains Tax. As dividends tax is presently 10% a further large saving can be effected by utilizing the window of opportunity.
Unfortunately the previsions relate only to certain specified instances and not to all immovable property which is owned by Companies, Close Corporations or Trusts. The following minimum requirements must be presented before such a transfer can take place:
For Companies and Close Corporations
- The transferee (the Purchaser) must personally and ordinarily have resided in the property since 11 February 2009 and have used it mainly for domestic purposes and will continue to do so until the date of registration of transfer of the property;
- The Purchaser together with his/her spouse must directly hold all the share capital of the Company or the member’s interest of the Close Corporation as from the 11th February 2009 to the date of registration of the property into the name of the Purchaser;
- The property must be less than 2 hectares in extent;
For Trusts
- The Purchaser must personally and ordinarily have resided in the property since 11 February 2009 and have used it mainly for domestic purposes and will continue to do so until the date of registration of transfer of the property;
- The property must be less than 2 hectares in extent;
- The Purchaser is the person who deposed of that residence to the trust by way of a donation, settlement or other disposition or who financed all the expenditure relating to such Property which was actually incurred by the trust to acquire and to improve the residence.
The window of opportunity is available until 31 December 2011.
Normal transfer fees, bond cancellation fees and bond registration fees will apply and one will have to arrange with the necessary financial institution to effectively ” transfer ” the bond from the relevant entity to the natural person who takes over the property.
‘ Please note that this is meant to be a comprehensive exposition on the effects of Section 9(20) of the Transfer Duty, Act 1949 and you are strongly urged to take legal advice before making any decisions in regard to the same. ‘ ”
This article has been reprinted with the kind pernission of Dykes,Van Heerden.
Tel: (011) 279-5000
Fax: (011) 955-4799
E-mail: info@dykesvanheerden.co.za
Call for Minister to Sort out Joburg Mess
“Billions of Rands tied up in property sales crisis
” Property transactions worth billions of Rands are being held up by the City of Joburg, which is taking months to issue clearance certificates to owners and developers.
This is grinding the property industry to a halt, says the Johannesburg Attorneys Association (JAA), and it hasn’t excluded the possibility of taking legal action against the Council. It is estimated there are 40 000 property sales being held up, involving R5 billion.
The Council has not responded to a request for comment. According to property developers, the problem started a few months ago when the Council moved to a new IT-system, called SAP. Since then, individuals and developers have been waiting for up to 7 months to get clearance certificates.
Anton Theron, acting chairman of the JAA’s property committee, said the association had been inundated with reports from its members regarding their problems. ” The JAA have been in discussion with officials in the rates department for many months, but nothing gets resolved. Our members are being reported to the Law Society by their clients for lack of performance because they cannot obtain rates clearance and are therefore unable to lodge transactions for registration.
” Our members, unfortunately, do not have any control over the processes within the Council and cannot perform their duties without the relevant clearance, ” he said.
The association also could not get information from the Council. Recently it asked its members to submit their complaints. ” We realised the problem is serious. We got 400 complaints, ” said Theron.
The Star spoke to several developers and attorneys, none of whom wanted to be named. One attorney said that if her name was mentioned, the Council would boycott all her applications. The problem was ” bigger than we could even imagine”.
” We were advised that staff are only going to start training on the new system shortly. I think it is going to take a very long time to get the system running smoothly. Unless the Council works 24 hours a day, I do not think we are going to see a vast improvement in a hurry. Our clients are extremely angry, and blame us. In many cases, people are being forced to sell their homes because of financial difficulties. They cannot afford to carry the costs. ”
The problem was ” too huge ” to be resolved at local government level, but should be escalated to the minister of local government as this was a political matter.
Jonny Novick, managing director of Vered Estates, said the processing issue had already had a negative short-term effect on the Gauteng property market and needed to be addressed immediately.
” Some of our clients who sold their homes last year are still awaiting clearance figures so they can obtain a rates clearance certificate. ” ‘
This article was written by Anna Cox, shared by Randburg branch and was originally published in the Star Newspaper on Monday, 24 May 2010.
Chas Everitt Randburg Office
Tel: 011 801 2500
Website: http://www.everitt-randburg.co.za
How to make a profitable purchase
If you’re property wise, you’ll be looking to make more “profit” when you buy a home than when you sell it in future.
And, says Berry Everitt, CEO of the Chas Everitt International property group, the way to do this is develop an eye for homes in good areas that may not look so great at the time of purchase but have good profit potential – in other words, homes that have the “right” things wrong with them.
Writing in the Property Signposts newsletter, he says these items include the following:
* A bad paint job. You should actually consider it a plus if you find a good property that really needs painting. You can discount your offer to compensate for the painting expense and inconvenience, and, immediately the paint is dry, look forward to an increase in home value equal to three to five times the cost of the paint.
* Old or uninspiring light fixtures. Among the least expensive and most profitable home improvements are new light fixtures – and skylights to open up dark hallways, bathrooms or kitchens.
* Ratty old carpets (provided the flooring beneath is sound). Another extremely profitable home improvement you can make is to install fresh new floor coverings. Sanding and varnishing existing wooden floors is also a good option, especially if they are in keeping with the age and character of the home.
* A neglected garden. Spending even a few hundred rand on plants, lawn, and a garden clean-up often adds two to three times that expense to the market value of the home.
* One bathroom. Buying a one-bathroom home can be very profitable if a second bathroom can be added within the existing floorspace. A second bathroom usually adds at least twice its cost to the home’s value – and it makes the home more marketable.
“On the other hand, though, you should absolutely avoid buying a home that needs a new roof, a foundation repair, a major electrical or plumbing upgrade, or repairs to water or termite damage.
“And, unless you are planning to live in the home for a long time, avoid buying one that will require additions such as a family room or another bedroom to make right for you. Such upgrades rarely add as much market value as they cost, and you are better off buying a home that already has all the rooms you need, even if it is somewhat more expensive.”
Issued by Chas Everitt International
For further information call
Berry Everitt on
011 801 2500 or visit
www.chaseveritt.com
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