Last year South African Revenue Services introduced a tax amnesty covering capital gains tax, transfer duty and secondary tax for all natural persons South African citizens willing to transfer property owned by them in a company, a trust or a close corporation into their own names.The amnesty, it was made clear, would expire in December 2012.
This “enlightened” measure, says Tony Clarke, MD of Rawson Properties, was hailed by the property sector as a breakthrough because the capital gains tax on companies 15% was high and on trusts higher still 20%, whereas by contrast individuals usually pay only ±10% and more importantly are exempt of tax on the first R1,5 million capital gain.
However, there was one major snag: the exemption applied only to property in which the owner “ordinarily resided”, i.e. his primary residence. Second homes, holiday homes, investment properties and the like initially could not be transferred to individual ownership without paying in full the taxes referred to.Now, however, that has all changed. The recently promulgated Tax Laws Amendment Bill allows secondary residential properties to benefit from the amnesty in the same way as primary properties – provided the transfer is set in motion, i.e. not necessarily completed – by December 2012.
Clarke said that there will still be cases in which it might be preferable to hold the property in a company or other legal entity. He pointed out, too, that the conveyancer’s fee would remain payable.Nevertheless, he said, the vast majority of property owners stand to gain significant tax benefits if they make use of the amnesty before it expires and he advised them strongly to do so.