General Conveyancing

Bert Smith Incorporated specializes in the delivery of specialist conveyancing services to its extended national and international client base.

Property Investment

Appreciation is the increase in your homes value. It often happens that home owners have finished up with far less resale that what they might have expected.

Consultations

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Amnesty for Re-Trasnfer of Company / Close Corporation / Trust Owned Homes

Historic Position

In the past the big advantage of owning a home through a Company, Close Corporation was that on a resale, the shares or Members interest in the Company / Close Corporation, could be transferred free from Transfer Duty and Capital Gains Tax.

Capital Gains Tax was, however, introduced from 1/10/2001 and is payable on the capital gain as follows:

  • Company/Close Corporation - 15%
  • Trusts - 20%
  • Natural persons up to - 10% with a full rebate on the first R1500 000.00 gain for Natural Persons. (No such rebate is applicable to Legal entities)

STC is payable on dividends arising from the disposal of property by a Company;

Transfer Duty is from 13/12/2002 payable on the transfer of shares or members interest;

Annual Fees payable by companies will increase from 2010.

Amnesty Opportunity

  • NB : Before selling/disposing of your residential property registered in your Company/Close Corporation or Trust consider the CGT implications and the huge savings if you use the amnesty provisions to first transfer the property into your own name and then to sell/dispose it without paying Transfer duty or CGT

Requirements

  • The Property registered in the Close Corporation Company or Trust must be used exclusively for domestic residence purposes;
  • The shares etc must be held by a natural person (and/or his spouse);
  • The Shareholder to live in the house from 11 February 2009 to transfer date;
  • The property must be the sole property of the Company;
  • The Company / Close Corporation / Trust to make a distribution of the property to the shareholder between 11 February 2009 and 31 December 2011 in anticipation of the winding-up or deregistration of the Company / Close Corporation / Trust

Consequences

  • The Company / Close Corporation / Trust is deemed to have disposed of the property for an amount equal to the Base Cost of the property;
  • The CGT is rolled over/deferred: If the shareholder sells the property at a later stage, he qualifies for the primary rebate (R1,5M);
  • No change in Estate Duty consequences;
  • No Transfer Duty or STC payable;
  • Existing loan (if any) to be disposed or re-registered;

Exclusions

  • If there are more than one shareholder in the company (and not related);
  • If Company owns more than one property;
  • If the shareholder is a legal person or trust;
  • If the shareholder is not living in the house as primary residence.
  • If the property's size exceeds 2 hectares;

Advantages

  • No Transfer Duty or STC

HUGE CGT savings (can be more than R300 000)

  • See Downloadable Document for Full Example

Caution

  • Companies/trusts may still be a viable vehicle to hold property, but must form part of the bigger estate planning.
  • Normal legal fees payable to the transfer attorney

You are more than welcome to contact me or my offices to schedule a consultation if you require advice and or assistance in the implementation of the ALA strategy.