ACQUIRING
Property
Ownership
The different ways of buying property
T
here are four main ways in which a property
can be purchased. In South African law, a
natural person is someone who acts and
conducts business in their own name, while a juristic
person is a legal entity, such as a company, trust or
close corporation.
Buying as a natural person
This refers to buying a home in your own name as an
individual. Deciding in which legal entity to purchase
a property must be carefully considered beforehand.
When a decision is made to buy a property as a buyto-let investment, it is important to consider and
plan what sort of strategy you, as the property owner,
have in owning the property.
“Where the primary residence is sold
for R2 million or less, the full capital
gain will be disregarded.”
When doing so, transfer duty will be paid
according to a sliding scale depending on the
purchase price of the home.
When it comes to Capital Gains Tax (CGT),
provided the property is the owners primary
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Residential Handbook 2015
residence, they will be exempt of paying any CGT
on the first R2 million of any profit made on the sale
of the property. Also, where the primary residence is
sold for R2 million or less, the full capital gain will
be disregarded.
Income tax that is paid might be lower (as little as
18%) than the tax paid if the property is owned in a
company or trust’s name.
Buying a property as a (Pty) Ltd
Private companies purchasing property pay transfer
duty at the same rate as a natural person. However,
no transfer duty is payable by the seller if they are
registered for Value Added Tax (VAT) and the
property forms part of the operations for which the
seller is registered.
When the property is sold as part of a rental
portfolio (?), the deed of sale must contain certain
specific provisions and may be zero-rated for VAT,
which means no transfer duty or VAT is payable.
Private companies will pay a comparably higher
CGT, with an inclusion rate of 50%, and an income
tax rate of 28%, which translates into an effective
CGT rate of 14%.
Since companies do not die, no estate duty is
payable. Although, if an individual is a shareholder
of the company, the value of the shares and the loan
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