The Taxation Laws Amendment Bill, of which most people are probably already aware due to the reports in the news and media, was promulgated on 30 September 2009.  This legislation provides much welcomed tax relief, especially for individuals planning to transfer residential property from a company, close corporation or trust.  Companies, close corporations and trusts will be exempted from Transfer Duty, Secondary Tax on Companies and Dividends Tax if a primary residence is transferred to an individual.  Capital Gains Tax will only be payable by the individual when the property is sold in the future and it will be calculated on the base cost at which the legal entity originally bought the property.

The exemption only applies
1. where the company or close corporation is a local company which owns a residence and all the shares are held directly by an individual or by the individual and his or her spouse; or
2. where the members interest in the close corporation is held directly by an individual or by the individual and his or her spouse; and
3. the property is a residential property which has only been used for normal domestic purposes since 11 February 2009; and
4. the individual takes transfer of ownership of the property in his or her name or in the names of both spouses between 11 February 2009 and 31 December 2011.
 
In the case of a trust, the exemption only applies where:
1. the individual or the individual and his or her spouse originally acquired the asset with their personal funds; or
2. the asset was donated to the trust by an individual or the individual and his or her spouse; or
3. the mortgage loan repayments were initially paid by the individual or the individual and his or her spouse out of their own funds (if the property is bonded); or
4. the property was used by the individual or the individual and his or her spouse as a residence for normal domestic purposes since 11 February 2009; and
5. the individual takes transfer of ownership of the property in his or her name or in the names of both spouses, between 11 February 2009 and 31 December 2011.

Since 1891 Cluver Markotter Inc has been striving to ensure that clients always receive the best legal advice to resolve their personal and business problems in the most cost-effective and practical manner.  Cluver Markotter Inc has an established property department of repute with expertise in all aspects of property law and commercial transactions related to immovable property.  This department provides wide-ranging services; including advice on tax issues related to immovable property transactions, for example Transfer Duty, Value Added Tax, Income Tax, Donation Tax and Capital Gains Tax, and will gladly assist you in this and any other regard. 

For any queries in this regard, please contact Arend de Waal at (021) 808 5656 and arendw@cm.law.za, or Lize Pecoraro at (021) 808 5663 and lizep@cm.law.za.