Offer to purchase question

[Speedster]

Thanks for all your input and comments.

The BOLD highlighted section is what I don't get. The son doesn't want to borrow money (as in a homeloan), nor does the parents want to borrow (as in lending) him the cash. As I said, neither party have the finances to do this .

You cant write IOU's out. I totally het the R100K off yearly per SARS's rules

Of course they can write IOUs. They're called loans. No money needs to change hands, it's just book entries

 

[zerocool2009]

Of course they can write IOUs. They're called loans. No money needs to change hands, it's just book entries

I will keep you guys posted on what legal advice this friend gets.

 

[Dark Agent]

I really confuse. Parents still have to pay tax on the property disposed.
Will not it be easier for parents to donate R1 million house and pay R180 000 in tax. The son takes a bond on the house for R180 000 to pay the tax.

If cannot pay the tax for transfer then anything else is just illegal and bypassing the system.

 

[Speedster]

I really confuse. Parents still have to pay tax on the property disposed.
Will not it be easier for parents to donate R1 million house and pay R180 000 in tax. The son takes a bond on the house for R180 000 to pay the tax.

If cannot pay the tax for transfer then anything else is just illegal and bypassing the system.

Why would parents pay tax on selling the house?

 

[Dark Agent]

Why would parents pay tax on selling the house?

Not sure, I read somewhere Capital Gain tax?
I might be wrong. There should be an easier way then bypassing the law with a fake loan.

 

[newby_investor]

Not sure, I read somewhere Capital Gain tax?
I might be wrong. There should be an easier way then bypassing the law with a fake loan.

It really isn't bypassing the law though, it's completely legal. It's just a bit of paperwork. It would be exactly the same as if the parents both donated the child R100k each year, until he had enough cash in the bank to buy the house from them, except they are doing it with an IOU instead of actual cash.

If the house is less than R2M, CGT won't apply (and even if it were more, it probably still wouldn't apply).

 

[Sinbad]

Not sure, I read somewhere Capital Gain tax?
I might be wrong. There should be an easier way then bypassing the law with a fake loan.

There's no CGT on primary residence.

 

[newby_investor]

There's no CGT on primary residence.

Not quite. There is, but there are also big exemptions which would mean that for this case (R1M) there's effectively no CGT:

Primary Residence

 

[Sinbad]

Not quite. There is, but there are also big exemptions which would mean that for this case (R1M) there's effectively no CGT:

Primary Residence

I stand corrected, thanks

 

[newby_investor]

I stand corrected, thanks

Yeah, it's a common misconception. You need to have made quite epic gains before you'd start having to pay CGT on your primary residence. Can happen, but I suspect it's rather uncommon.

 

[Sinbad]

Yeah, it's a common misconception. You need to have made quite epic gains before you'd start having to pay CGT on your primary residence. Can happen, but I suspect it's rather uncommon.

Is it a relatively new thing?

 

[Speedster]

Is it a relatively new thing?

Been this way since the introduction of CGT. The values do get adjusted from time to time though.

 

[PotatoGuardian]

Sorry to derail current discussion.

What is the likelihood of something going wrong before transfer? Our estimated transfer date is end of Feb. Our current landlord found someone who could take occupation on 1 Feb. He has been a really awesome landlord so we don't want him to lose out.

We could just pay occupational rent but we didn't stipulate it in the OTP. But anyway we are more worried that something could go wrong before transfer and the house then isn't ours.

 

[newby_investor]

Sorry to derail current discussion.

What is the likelihood of something going wrong before transfer? Our estimated transfer date is end of Feb. Our current landlord found someone who could take occupation on 1 Feb. He has been a really awesome landlord so we don't want him to lose out.

We could just pay occupational rent but we didn't stipulate it in the OTP. But anyway we are more worried that something could go wrong before transfer and the house then isn't ours.

Hang on. Your landlord wants to get new tenants in the place you're moving out of?

Chances of something going wrong if all the agreements are signed is pretty low. If you've signed with your bond attorneys then it's as good as done IMO - but speak to the conveyancer for a proper opinion.

If you haven't agreed on an amount of occupational rent - speak to the conveyancer and get an agreement with the seller. It's very easy to add this if it wasn't specified up front.

 

[Speedster]

Hang on. Your landlord wants to get new tenants in the place you're moving out of?

Chances of something going wrong if all the agreements are signed is pretty low. If you've signed with your bond attorneys then it's as good as done IMO - but speak to the conveyancer for a proper opinion.

If you haven't agreed on an amount of occupational rent - speak to the conveyancer and get an agreement with the seller. It's very easy to add this if it wasn't specified up front.

This. If financing is sorted that's the biggest hurdle out of the way, unless one party decides to get difficult about something

 

[Speedster]

We just did an inventory of everything that needs to be moved, and I'm surprised by how much stuff it is. Anyway, I'm probably going to have to get a moving company for at least the furniture. Any tips for this?

 

[PotatoGuardian]

Hang on. Your landlord wants to get new tenants in the place you're moving out of?

Chances of something going wrong if all the agreements are signed is pretty low. If you've signed with your bond attorneys then it's as good as done IMO - but speak to the conveyancer for a proper opinion.

If you haven't agreed on an amount of occupational rent - speak to the conveyancer and get an agreement with the seller. It's very easy to add this if it wasn't specified up front.

Yup currently renting and we gave him 3 month's notice as per our contract. He has found someone that can take occupation soon, before our registration date

This. If financing is sorted that's the biggest hurdle out of the way, unless one party decides to get difficult about something

All the docs are signed we are just waiting for them to lodge when the office reopens but I think we might still be waiting for a couple of docs from seller like the building registration or something

 

[zerocool2009]

Yup currently renting and we gave him 3 month's notice as per our contract. He has found someone that can take occupation soon, before our registration date



All the docs are signed we are just waiting for them to lodge when the office reopens but I think we might still be waiting for a couple of docs from seller like the building registration or something

Take myself as an example. Signed in mid July 2020, lodged in end Aug. Then it was rejected because of the seller's bond (major issues). Then the DEED was lost. It was registered end Nov only ! I would say plan for the worst.

In another case now, a tenant called me, they bought a place, giving 2 months notice. They hope it will be registered in end Feb. So I am looking for new tenants now. (the joy's of being a landlord)

 

[Toxxyc]

Stupid Q - if you apply for loans at all the banks, do all the banks send people to come check out the place before they give you a quote? Because my originator applied at all the places, but so far only Absa and FNB came to check out the place.

 

[zerocool2009]

Stupid Q - if you apply for loans at all the banks, do all the banks send people to come check out the place before they give you a quote? Because my originator applied at all the places, but so far only Absa and FNB came to check out the place.

You apply
AOP ( approval in principle)
Valuation
Final grand