Home Purchasing / Transfer

SauRoNZA said:
How would they do that? The market value is determined by the sale price.

R1 would be a bit crazy but I don't see how they could tax your for any more than the last evaluation on the property from municipality. Which is usually way below market value.

In the case of a bond the bank would do their due diligence and have something to say I'm sure.

Besides the fact that SARS doesn't tax the seller, but rather the buyer.
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Apologies for the clumsy wording, you are right, the buyer is taxed. I was talking in the context of selling to a connected party such as the OP's example.

I sold a property I owned to our family trust a couple of years ago and needed to produce three valuations by registered real estate agents to satisfy SARS wrt the transaction price.
 
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signates said:
Fair market value is not determined by the sale price.

SARS will only know if you declare it ok your tax return. The difference between FMV and sale price would be treated as a donation by the seller. The seller(donor) pays donation at 20% on total donations made over R100k for the tax year.

On mobile so just a brief explanation.
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That may be true in terms of income tax purposes, but remember there are also transfer duties to be paid.
 
Speedster said:
That may be true in terms of income tax purposes, but remember there are also transfer duties to be paid.
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Yes, so in this case, perhaps it's 'cheaper' to take the hit on donations tax in this particular case with a lower sale price as that money could be used for donations tax instead of transfer duty.

(Still 'angry' at paying 265k transfer duty a year ago!!!)
 
Speedster said:
Apologies for the clumsy wording, you are right, the buyer is taxed. I was talking in the context of selling to a connected party such as the OP's example.

I sold a property I owned to our family trust a couple of years ago and needed to produce three valuations by registered real estate agents to satisfy SARS wrt the transaction price.
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How do these auctions gets away with it then if they are sold for next to nothing?
InternetLuddite said:
Yes, so in this case, perhaps it's 'cheaper' to take the hit on donations tax in this particular case with a lower sale price as that money could be used for donations tax instead of transfer duty.

(Still 'angry' at paying 265k transfer duty a year ago!!!)
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Jesus did you buy a place for 20bar or something?

Or you referring to the bond costs and all of it together?
 
InternetLuddite said:
Yes, so in this case, perhaps it's 'cheaper' to take the hit on donations tax in this particular case with a lower sale price as that money could be used for donations tax instead of transfer duty.

(Still 'angry' at paying 265k transfer duty a year ago!!!)
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I don't think it's an either or. SARS will get you on the transfer fees at fair value for the property, and potentially on donations tax when it comes to submitting your tax return. The transfer fees are calculated (and paid) as part of the property transfer, they're completely unrelated to one's income tax return.
 
zizo911 said:
Would I need to go to a convenyancer first, or apply for a bond first?
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You'll need a signed Offer to Purchase (OTP) before you can apply for the loan. You can draw up your own OTP (download and adjust from the internet) or ask an estate agent to help you. The agent will probably charge you a fee. Once you've got the OTP you can approach the banks, or a bond originator.

You can start talking to a conveyancer as soon as you've decided to go ahead with the purchase. You can also shop around a bit, they have leeway to give you some form of discount but be warned, they don't come cheap.
 
Speedster said:
You'll need a signed Offer to Purchase (OTP) before you can apply for the loan. You can draw up your own OTP (download and adjust from the internet) or ask an estate agent to help you. The agent will probably charge you a fee. Once you've got the OTP you can approach the banks, or a bond originator.

You can start talking to a conveyancer as soon as you've decided to go ahead with the purchase. You can also shop around a bit, they have leeway to give you some form of discount but be warned, they don't come cheap.
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Thank you, would I need to pay them out of pocket, or can it be taken from the bond?
 
If you sell it for R1 SARS can actually stop the transaction !

Another thing to remember, the buyer and seller (how they are related is also important). If you sell under market value, SARS will jump in (in this case, mother and son)

My 2c on this, before you sign an OTP (get some legal help).

A substitution cant be done as your name isnt on the property (That could have saved you thousands)
 
SauRoNZA said:
How do these auctions gets away with it then if they are sold for next to nothing?
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I think on auction you can make a strong case to SARS that, since it was an open market auction, the purchase price is fair value. But I am speculating here. I do know they look closely when property is transferred between "connected parties" (i.e. when selling to a family member or company of which you're a director etc).
 
With Auctions ALL banks have reserved pricing. They wouldnt sell it for a loss to be honest !
 
zizo911 said:
Thank you, would I need to pay them out of pocket, or can it be taken from the bond?
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Sometimes the banks will include the transfer costs (lawyers fees & taxes) in the bond, but that differs from client to client.
 
Speedster said:
Sometimes the banks will include the transfer costs (lawyers fees & taxes) in the bond, but that differs from client to client.
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Speeder is 100% correct !

It all depends on your portfolio at the bank. If they offer you a 100% bond (they might include to pay all extra's)
 
SauRoNZA said:
Nobody said they would.

But it's often way under market.
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Think you missed me on that one ...

If a property goes on auction, and the outstanding bond is R100K, and valued at R1.5kk, the bank will at least accept R100K, SARS is another story there !
 
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zerocool2009 said:
Think you missed me on that one ...

If a property goes on auction, and the outstanding bond is R100K, and valued at R1.5kk, the bank will at least accept R100K, SARS is another story there !
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Then we are on the same page really.
 
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