2nd Property Inheritance, 2 questions please.

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leontjie

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Hi If someone could please help me on the following matter or point me in the right direction...

My dad has to reduce his estate below 3.5m to avoid 20% tax.

So has decided to give and pay transfer of a property to my name. He will still use it for himself until the time comes and no rent will be payable. But when the time comes he has a reduced estate and the property will already be on my name.

I currently own my own property and still have a bond, where i currently live.

Will the 2nd property going on to my name have any tax implications for me? or any other financial advantagous or disadvantagous? Considering for the next possible 5 years i have no use or income from it?

2nd question. I want to, but can I ask them to transfer the property straight to my daughter (only 2 years old) So that one day she does not have to pay the transfer fees? As I would one day leave this to her anyway. Is there a thing you have to be certain age to own a property? Sorry if these are silly questions?

Thanks in advance.
 
leontjie said:
Hi If someone could please help me on the following matter or point me in the right direction...

My dad has to reduce his estate below 3.5m to avoid 20% tax.

So has decided to give and pay transfer of a property to my name. He will still use it for himself until the time comes and no rent will be payable. But when the time comes he has a reduced estate and the property will already be on my name.

I currently own my own property and still have a bond, where i currently live.

Will the 2nd property going on to my name have any tax implications for me? or any other financial advantagous or disadvantagous? Considering for the next possible 5 years i have no use or income from it?

2nd question. I want to, but can I ask them to transfer the property straight to my daughter (only 2 years old) So that one day she does not have to pay the transfer fees? As I would one day leave this to her anyway. Is there a thing you have to be certain age to own a property? Sorry if these are silly questions?

Thanks in advance.
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You will have to pay donations tax on the value of the property upon transfer in either case. Rather look at putting it in a trust.
 
P924 said:
You will have to pay donations tax on the value of the property upon transfer in either case. Rather look at putting it in a trust.
Click to expand...

Wont that also involve paying tax?
 
For individuals, donations are subject to a Donations Tax of 20%, wow so i will be liable for 20% of proerty value? That is big money? no way to pay that... Will have to reolook above. How will it work with a trust?
 
Tax man always has to get his cut. Somehow someway. Tax man ALWAYS gets paid.
 
well seems the answer will be to keep it in my dad name, as 20% above 3.5 will be less than 20% on each house. Thanks.
 
Also remember it is the person that makes the donation that has to pay the tax, not the person that receives it, unless the donor fails to pay. Then both are liable.

"The person making the donation (donor) is liable for the tax but if the donor fails to pay the tax within the set period the donor and donee are jointly and severally liable for the tax (section 59)."
 
I stand to be correct but the tax implication for you would only be applicable when selling the second property.

Just taking ownership of it shouldn't cost you anything.

But the money lost in transfer duties and donation tax probably completely negates the money lost in tax in the first place if he just kept it.
 
Which valuation are you using to assess tax? The council figure is usually quite low.
 
Parents can donate to their kids up to R100k per annum without incurring donations tax.
Why not draw up a sale agreement to buy the property from him at a market related price. Draw up the loan agreement including interest. Your father can then write-off R100k of the loan every year until its zero. Will take sometime and only issue really is if he dies before it reaches zero.

Property can be transferred to you immediately. Can be considered by SARS as an avoidance scheme but chances are slim. Recently had a lawyer draw up a sale agreement like this. Just don't put it in the loan agreement that the father must write-off R100k every year. All that the father now does is issue his son a loan statement and a letter indicating his donation of R100k to offset the balance.

A bit more complicated and on mobile. Speak to a decent tax specialist regarding structuring everything as tax efficient as possible.
 
signates said:
Parents can donate to their kids up to R100k per annum without incurring donations tax.
Why not draw up a sale agreement to buy the property from him at a market related price. Draw up the loan agreement including interest. Your father can then write-off R100k of the loan every year until its zero. Will take sometime and only issue really is if he dies before it reaches zero.

Property can be transferred to you immediately. Can be considered by SARS as an avoidance scheme but chances are slim. Recently had a lawyer draw up a sale agreement like this. Just don't put it in the loan agreement that the father must write-off R100k every year. All that the father now does is issue his son a loan statement and a letter indicating his donation of R100k to offset the balance.

A bit more complicated and on mobile. Speak to a decent tax specialist regarding structuring everything as tax efficient as possible.
Click to expand...

good advice.
 
SauRoNZA said:
I stand to be correct but the tax implication for you would only be applicable when selling the second property.

Just taking ownership of it shouldn't cost you anything.

But the money lost in transfer duties and donation tax probably completely negates the money lost in tax in the first place if he just kept it.
Click to expand...

Transfer does cost... even if you are inheriting.
 
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