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Question of the Day: What is the ultimate French toast topping?
Transfer Properties to Trust
- Thread starter Jchan11hk
- Start date
AchmatK
Honorary Master
Transferring it to a trust would be considered a disposal and would trigger CGT.
Jchan11hk
Senior Member
- Joined
- May 12, 2014
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Okay, I see, so I need to think about transferring it at a price that will not attract too much CGT.
Also, does people use a trust/company to hold their investment properties?
I put everything under my own name, so probably the stupidest mistake I have ever done.
Also, does people use a trust/company to hold their investment properties?
I put everything under my own name, so probably the stupidest mistake I have ever done.
zamedic
Well-Known Member
If the trust is not paying you for the property, this would be seen as a donation and you would be liable for donations tax http://www.sars.gov.za/TaxTypes/DonationsTax/Pages/default.aspx
For Estate Planning and Trust Law, I found Millers Attorneys in George the most knowledgeable.
Why is this stupid?
zamedic
Well-Known Member
I wouldnt say its stupid, it just means the property is under your name, so if someone tries to sue you / fall into debt / you get divorced - then the assets can be attached.
If the assets are in a trust, then in essence you would pay "rent" to the trust and the trust would pay for the expenses on the property. Since its not yours, no one can attach the property if they try and sue you.
Not quite true though. A trust set up simply to escape a liability for example, can be taken to court and judged for what it is: a sham/alter-ego trust. Then its protections simply fall away and *poof* so does the house. All that trouble just made it cost more...
No free lunch and all that.
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How would one gain access to the properties again if the assets now fall under a trust? Can you appoint yourself as the sole trustee of the trust??
It looks like incomes to trusts are taxed at a flat rate of 45%, so I can't see the tax benefits there.
I can understand the benefits of trusts when it comes to legal liabilities and estate planning for the next generations, but are there other benefits, since lots of wealthy individual set these up, there should be some sort of benefits in terms of taxes?
It looks like incomes to trusts are taxed at a flat rate of 45%, so I can't see the tax benefits there.
I can understand the benefits of trusts when it comes to legal liabilities and estate planning for the next generations, but are there other benefits, since lots of wealthy individual set these up, there should be some sort of benefits in terms of taxes?
Freshy-ZN
Executive Member
So much wrong info above. There is a way to transfer property to trusts without full CGT/Donations tax etc. I wont pretend to remember the full details but any half decent attorney or trust admin will be able to explain it to you.
You donate the bare dominium to the trust & keep the usufruct under your name. The tax liable will be less, which is good & also it is not payable on transfer-you can opt to pay it when you die. And the value is not linked to inflation...meaning if you must pay R50 000 and you die in the year 2050, the tax due will still be R50 000 but obviously cheaper in the future due to inflation.
When you die, the usufruct will then go to the trust-making the trust the full owner of the property in the year 2050.
Once you give away bare dominium to the trust, you are no longer the owner of the property, you have usage rights only.
Pho3nix
The Legend
I would rather pay less tax than lose my house to an ex spouse
Wouldn't it be more tax?
Problem being that these are exactly the people who have a trust solution to sell you.