Buying a house for someone else.

[xrapidx]

Does anyone know if there are implications of buying a house and putting it in someone else's name? (tax, etc).

i.e. Person A buys a house for 2.5m and registers it in Person Bs name. Person B has just gained an asset of 2.5m without paying anything.

 

[cguy]

Certainly a donations tax I would think.

 

[Pineapple Smurf]

Yeah i think they call that tax evasion

 

[Gordon_R]

Sounds fishy. Seems like money laundering.

 

[xrapidx]

Nothing fishy about it - parent buying a house for their kid.

I said the government probably wants their share - because they always do.

 

[/dev/null]

20% donations tax

 

[RedViking]

Feels like it was already asked a day or two ago.

 

[Pegasus]

Does anyone know if there are implications of buying a house and putting it in someone else's name? (tax, etc).

i.e. Person A buys a house for 2.5m and registers it in Person Bs name. Person B has just gained an asset of 2.5m without paying anything.

Normally people use a Trust for that.

Setting Up A Family Trust | Sanlam Reality

A well-planned trust can protect your assets and preserve your wealth – we investigate the steps behind setting up and managing a family trust.

www.sanlamreality.co.za

Moving assets to a family trust - South Africa - Netto Invest

What are the important considerations when moving assets into trust? Netto Invest partner Ian Beere was asked to advise.

www.netto.co.za

Transferring property into a trust: What you need to know

It’s common perception that trusts are for the wealthy, but could homeowners benefit from placing their property into a trust? Here, the pros & considerations.

www.ooba.co.za

 

[RedViking]

Dad wants to buy me a townhouse - tax?

Hi all, So my dad got retrenched last year and wants to allocate some of his severance package to buying me a townhouse. If it goes on my name is there anything we need to know about tax implications? Thanks!

mybroadband.co.za

 

[Pineapple Smurf]

Feels like it was already asked a day or two ago.

Alzheimer's isn't for pussies !!!!
Sorry, what was the question again?

 

[HavocXphere]

Certainly a donations tax I would think.

Except if donor isn't ZA tax resident

 

[JibbersCrabst]

Everyone screams donation, but what if it's just a "loan"? Can be governed by a loan agreement, however "serious" the loan may be..

Last time I check you had to be a registered credit provider to lend me more R500k though, not sure what it is now.

 

[Speedster]

Everyone screams donation, but what if it's just a "loan"? Can be governed by a loan agreement, however "serious" the loan may be..

Loan is an option, but that loan will be included in the parents estate on their passing and subject to estate tax. The parents are able to write off up to R100k per year each tax free to decrease the outstanding loan amount and minimise the estate duty upon their passing.

 

[beefymoocow]

Everyone screams donation, but what if it's just a "loan"? Can be governed by a loan agreement, however "serious" the loan may be..

Last time I check you had to be a registered credit provider to lend me more R500k though, not sure what it is now.

A loan can be structured. But you will still pay some taxes but less. If you don’t charge interest Sars will deem at market related rate that will be included in your gross income as the donor. The donee probably won’t be able to claim anything since it’s probably won’t be used for the production of income. If he stays there.

 

[Speedster]

A loan can be structured. But you will still pay some taxes but less. If you don’t charge interest Sars will deem at market related rate that will be included in your gross income as the donor. The donee probably won’t be able to claim anything since it’s probably won’t be used for the production of income. If he stays there.

No tax effect on an interest free loan between individuals.

 

[xrapidx]

In this case - the house is to be rented out to someone else, the income from the rent will go to the parents until they're out of the picture.

How should a loan be structured? Surely it has to be some sort of contract?

I have advised them to speak to a professional - but the case itself interests me - because I can't stand the tax man.

 

[R13...]

Except if donor isn't ZA tax resident

Recipient would still be liable for some kind of tax

 

[beefymoocow]

No tax effect on an interest free loan between individuals.

There is tax consequence if its not deemed at market value. Can’t remember the proviso. But it’s similar safeguard to the one where you sell your house at a significantly low price to avoid transfer duties and taxes.

 

[Speedster]

Recipient would still be liable for some kind of tax

Nope. Donations from non-tax residents aren't taxable in SA.

 

[Speedster]

There is tax consequence if its not deemed at market value. Can’t remember the proviso. But it’s similar safeguard to the one where you sell your house at a significantly low price to avoid transfer duties and taxes.

I doubt this. Individual loans are like the wild west. If you start adding trusts and the like the picture changes.