Registration of Usufruct
Benefit From the Registration of Usufruct
The owner of a property and the person that utilises that property is not always the same entity. It can be a common arrangement, such as a tenant making use of the building, or it could be via means of usufruct. What this refers to is the legal right to benefit, derive a profit from and use someone else’s property provided that that person’s property is not damaged in any way. The main focus of this legal matter is to obtain these rights of usage in a legal manner. This can be a complicated legal matter, and it is certainly advisable that you make use of an expert legal representative when it comes to the registration of usufruct.
So if the registration of usufruct is such an intricate procedure, why even bother? Because, if implemented correctly, there are a number of benefits you can enjoy from a usufruct, tax saving solutions not being the least. It happens from time to time that a person has a need to transfer their property as a long term asset to a Trust. There are a number of reasons why this might be necessary, such as for risk management or estate planning purposes. The problem is that the transfer fees are very high at a rate of 8% of the purchase price. This works out to R80 000 that must be paid to the Receiver of Revenue for the purposes of transfer duty on a R1 000 000 property. This can, however, be solved by transferring the property to the Trust with the reservation of a Usufruct in favour of the seller. This will take the form of a ‘Right of Occupation’ reserved in favour of the seller in a case like this. If this is done, you can expect to pay as little as R1 352, 96 for the transfer of the same property as mentioned above. That is a substantial saving that no-one can ignore.
While this is certainly an attractive offer, there are certain conditions. The best solution is to speak to a professional property conveyancer such as Bert Smith Incorporated in order to determine what the best solution would be for you and how to implement that solution correctly. Contact us for assistance with all property related legal issues, such as the registration of usufruct.