The following Good News from the budget speech.
A revised transfer duty structure will apply to all properties acquired under purchase agreements concluded on or after 23 February 2011.
A significant effect of these amendments is that it is no longer more expensive to purchase property in a legal entity (Company, Closed Corporation or Trust) than in a natural person's name.
For properties that cost more than R600 000, you will now pay transfer duties as follows:
Transfer duty payable
|R0 – R600,000||no payment|
|From R600 001 to R1 000 000||3% of the purchase price|
|From R1,000,001 – R1,500,000||R12 000,00 + 5% of value from R1,000,000 - R1 500 000|
|From R1,500,001 – unlimited||R37 000,00 + 8% of value from R1,500,000 and above|
As an example;
Comparing transfer rates on a property for R3 000 000
New Transfer duty for both natural and legal person now payable:
On first R1 500 000 = R37 000
From R1500 000 to R3 000 000: R3 000 000 - R1 500 000 x 8% = R120 000
Transfer duty due: R37 000 + R120 000 = R157 000.
Previous transfer rates would have amounted to
R185 000 (R25 000 + R2 000 000 x 8%) for a natural person and
R240 000 (R3 000 000 x 8%) for a legal person which was charged at a flat rate of 8% irrespective of the purchase price 8%
Therefore the biggest saving would be on the transfer of trusts and companies as in this case the saving would amount to R83 000. This is good news for those who would want to buy their properties specifically into their family trusts.