Will banks let you take advantage of SARS offer?

SARS has given property owners the opportunity to transfer their primary residences out of companies, close corporations and trusts into their own names, without paying transfer duties.

However, according to Johan Lubbe, director at Werksmans, such transactions should be made subject to individuals again being granted new bank loans in their personal capacity, if the existing bonds have not been fully paid.

Lubbe says that such a condition would safeguard property owners against some of the difficulties they may come across while taking up the offer.

"Say, for example, the director of the company obtained a bond 10 years ago and now wants to transfer the property into his own name. Then, it was quite easy to get money from the banks. Now he might not even qualify for a new bond due to the stipulations of the new National Credit Act. The lending criteria are different and the requirements are much stricter than they used to be," Lubbe says.

Despite this, Lubbe believes banks will welcome the move, as it is easier to recover debts from private individuals than from companies.

The Taxation Laws Amendment Act gives property owners until the end of 2011 to take up the offer, and exempts transfers of property out of entities and into individuals' names from transfer duties and secondary tax on companies (STC).

It allows for a rollover on capital gains tax (CGT) for the company - putting the owner in the position of the company.

The major benefit of having a property registered in your own name is that such a property is less heavily taxed when it is sold than those registered in the name of a company, close corporation or trust.

Weekend Property supplement (Saturday Argus)

Posted at 07:17AM Feb 22, 2010 by Editor in Residential  |  Comments[2]