No extra tax incurred if you leave property to your heirs

People are under the impression that if they have a residential property to leave to an heir this will involve a higher tax level than if cash or shares are bequeathed.

"However," says Mike van Alphen of Rawson Finance, "the only cost that the beneficiary will pay on taking over his property is the relatively small attorney's transfer fee. Transfer duty is not payable on a bequeathed property. The transfer costs, which work on a sliding scale calculated by the Law Society, are relatively low."

When an estate is being wound up, said van Alphen, the current value of the property will be estimated and included in the total amount of the estate. If this comes to more than R3,5 million (or R7 million where the beneficiary was married in community of property), a 20% estate duty tax will be payable - but this is the only tax liable on the property. Any capital gain on the property since it was first bought by the benefactor is not payable by the heirs or the estate.

"I am often asked by older people," said van Alphen, "whether they should leave their properties as they are to their heirs. As explained, from a tax view point, there is no reason why this should not be done. From an investment viewpoint, however, I believe it also makes a great deal of sense, especially if the benefactor prevents his heirs from selling the property for a stipulated period of time."

The reason for this, said van Alphen, is that time and again he has seen inherited cash thrown away on unsound get-rich-quick projects or investments, but property almost always represents a very sound investment and rents collected each month by a reputable agent can support and simplify the lives of a young family to a remarkable extent.

"It should not be forgotten," added van Alphen, "that right now property is starting to appreciate again and I have no doubt that this process will continue. It may not be the most spectacular investment, but from a safety and income producing angle property is a very sound bet."

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
    • 22 Nov 2017
      While sales have noticeably slowed in most sectors in most Cape town suburbs, the security estate sector in Constantiaberg has bucked the trend by remaining buoyant, with sales by August this year already surpassing total sales in 2016.
    • 22 Nov 2017
      The end of the year is fast approaching, and so are all the travellers, tourists and holidaymakers. For those who live near or own a property in a holiday-hotspot, the festive season also brings with it an abundance of short-term rental opportunities. Its a great way for property owners to make a few extra rand for their own holidays or to put towards their savings.
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
    • 21 Nov 2017
      When an offer to purchase a property is signed by both buyer and seller, this constitutes a binding agreement or “Deed of Sale” between the two parties. However, in most cases the “standard contract” might not be enough to cover all the specifics pertaining to the sale. The agreement may require some additions or alterations to clauses, which needs an expert hand in the drafting of such
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us