Dad wants to buy me a townhouse - tax?

[RedViking]

Transferring property to a family member in South Africa

If you are considering gifting property to a family member you must do your research to fully understand the financial implications and hidden costs.

www.ooba.co.za

 

[TheMightyQuinn]

Why doesn't your father just buy the place and let you live in it for free until he dies.

Then leaves it to you in his will?

 

[RedViking]

Why doesn't your father just buy the place and let you live in it for free until he dies.

Then leaves it to you in his will?

Gonna pay 20% tax /estate duty anyways.

 

[krycor]

Speak to a tax lawyer.. either donation staggered over a few years or setup a trust(if total value exceeds x million) where parents are the main benefactors but this does come with annual accounting costs. There is no transfer duty cost on a trust and might be good going forward? Though most of the tax benefits and debt risk is reduced due to abuse.

Keep in mind this would mean donating 100k per annum on a loan you take out which might not be the most efficient if you aren’t contributing too to reduce the cost of the loan and carries risk if something happens prior to completion.

What are South Africa’s tax rules around donations?

The South African Revenue Services (SARS) has issued a clarification note around donations and the taxes that apply.

www.google.com

I’m pretty sure you can receive a max of R100k? Not sure.

People(my parents did so too) usually do this sort of thing as part and parcel of their estate and retirement planning wherein they phase in donations and estate trusts to reduce the inheritance tax payable.

Ps. This is where a TFSA account for a kiddy works phenomenally well.. but the gov control there of is a slight issue.

 

[SYNERGY]

Dad meet son:

Buying a house for someone else.

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.

mybroadband.co.za

 

[ponder]

Speak to a reputable tax consultant, they know all the details/gaps to minimise the tax liabilities of both parties involved.

 

[Speedster]

Speak to a tax lawyer.. either donation staggered over a few years or setup a trust(if total value exceeds x million) where parents are the main benefactors but this does come with annual accounting costs. There is no transfer duty cost on a trust and might be good going forward? Though most of the tax benefits and debt risk is reduced due to abuse.

Keep in mind this would mean donating 100k per annum on a loan you take out which might not be the most efficient if you aren’t contributing too to reduce the cost of the loan and carries risk if something happens prior to completion.

What are South Africa’s tax rules around donations?

The South African Revenue Services (SARS) has issued a clarification note around donations and the taxes that apply.

www.google.com

I’m pretty sure you can receive a max of R100k? Not sure.

People(my parents did so too) usually do this sort of thing as part and parcel of their estate and retirement planning wherein they phase in donations and estate trusts to reduce the inheritance tax payable.

Ps. This is where a TFSA account for a kiddy works phenomenally well.. but the gov control there of is a slight issue.

You can receive an infinite amount of donations tax-free, as long as the donor is under their R100k annual limit or pay the 20% donation tax

 

[/dev/null]

I think taxman has this stuff covered.