Real Estate Investor Magazine South Africa February/ March 2020 | Page 31

If, however, the heirs decide to sell the property to an
outsider then transfer duty will apply, which is in most cases
paid for by the buyer. It’s of upmost importance that a property
owner has a will so that it ensures the estate goes to the right
people.
Estate transfer costs
Transfer costs regarding the inheritance of property refers to
the cost involved for moving the immovable property from
the deceased estate to the heirs or a third-party purchaser.
It’s a complex process which is usually best dealt with by
conveyancing attorneys.
According to conveyancing attorneys, Denoon Sampson
Ndlovu Inc, “When a person dies the Master of the High Court
appoints an executor to administer the deceased estate.
The Executor is the only person who is lawfully authorised
and empowered to deal with the assets of the deceased. The
purpose is to ensure an orderly winding up of the financial
affairs of the deceased, and the protection of the financial
interests of the heirs.”
Ooba offers a transfer cost calculator to give you an idea of
how much it would cost to transfer a property.
LEGISLATION & PROPERTY INHERITANCE
South Africa’s inheritance laws apply to every person who
owns property in South Africa. The three main statutes
governing inheritances in South Africa are:
The Administration of Estates Act, which regulates
the disposal of the deceased’s estate in South Africa;
The Wills Act, which affects all testators with
property in South Africa;
The Intestate Succession Act, which governs the
devolution of estates for all deceased persons who
have property in the Republic and who die without
a will.
A fixed property is not considered any different to other
moveable assets pertaining to inheritance. Any issues that arise
regarding inheritance (whether it concerns foreigners or South
Africans) will be dealt with by the master of the high court any
in any High Court of South Africa if required.
The law of succession in South Africa
For people who relocate to South Africa and buy property
or settle here long-term, it’s wise to understand the laws of
succession and the inheritance tax that applies. If you are a
foreigner with a property in South Arica, it’s advised to write
your last will and testament in South Arica. This will ensure your
assets are protected in the event of your death.
Step-by-step guide on an inherited property:
Step 1: Be aware that you may not be the only one with a
claim to the asset.
Check if there are outstanding bond payments, unpaid rates or
utilities, or any loans that were secured using the property as
collateral. These debts need to be settled by the estate or the
beneficiary before a transfer takes place.
Check the title deed and make sure the details are correct
as errors can lead to delays or complications with the transfer.
Step 2: Get a valuation
The next step after you’re made aware of any of the liabilities
relating the property will be to book a professional valuation.
The most obvious reason for this will be to understand how
much the property is worth as it stands if you’re deciding
whether to sell. It’s still a good idea to get a valuation if you
intend to keep the property to ensure accurate home insurance
rates and to get an idea of potential rental returns.
Step 3: Get a home inspection
On top of a valuation, a home inspection will reveal any
potentially serious maintenance issues that may affect the
viability of either keeping or selling the inherited home. Many
older homes will require more renovations that could turn out
to be costly and potentially become more of a financial burden.
Step 4: Assess your options
Once you have a better idea of the real value and condition of
the property, you will be able to make a more informed decision
on whether to live in it, sell it or rent it out. Decide whether the
sentimental value or profit is more important to you.
Step 5: The costs Involved
It’s good for a beneficiary to be aware of the costs involved with
regards to the fees, duties and tax of a property and whether it
can be covered by the estate. Most of these costs can typically
be covered by the estate however apart from that is know if
whether Capital Gains Tax applies.
Under South African tax law, CGT only applies when the
property is sold by the beneficiary and is calculated based on
the difference between the property’s present-day value and
its value on the day it was inherited.
Advice for property owners
If you own a property, it would be beneficial for yourself
and your chosen heirs to be aware of the process involved
of inheriting a property. “Understanding your options and
obligations can make the process much simpler for everyone
involved,” explains Bill Rawson, chairperson of the Rawson
Property Group.
The law requires any outstanding debt to be settled first,
this could lead to the selling of the property in a hurry. It’s also
prudent to be aware if capital gains tax applies on the profit.
Establishing a trust before his/her death is beneficial as its
not frozen upon the death of a spouse and not subject to any
estate duties. While an objection would be that it costs money
to establish a trust and the taxes incurred are higher, it ensures a
smoother handover process, especially to following generations.
SOURCES Rawson Property Group, Property 24, Denoon
Sampson Ndlovu Inc, SARS
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