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A Fin24 user who is renting a house from his parents wants to know how to get the house in his name. He writes:
I rent a house from my parents where there are two homes on the property. I would like to put the house in my name but because I cannot show an income on paper, I can't do it.
Tenants with me on the site pay and I pay my portion every month; do you have any advice on how I can get the property in my name?
I thought of a CC but then there are more monthly fees involved with the taxman. Please help.
Mari van Wyk, Korbitec executive manager: customer relationships responds:
Property is a hugely valuable asset, as well as a large financial obligation.
As such, there is a need for regulations to ensure that those who purchase property, particularly when financing is required, are in fact in a position to fulfil their financial obligations.
Your question seems to suggest that you are only looking for one of the houses on the property to be transferred into your name.
Based on this, Meyer de Waal, from Oosthuizen & Co, explains that there are two possible options available: subdividing the property, or opening a sectional title scheme.
In both cases, your parents will then be able to transfer one of the houses into your name.
There are, of course, bank and South African Revenue Service (Sars) requirements in order to successfully achieve this.
De Waal explains that "Sars will require that you produce at least two certificates from independent estate agents to reflect the fair market valuation of the property purchased.
"However, if you need to raise finance to pay for the property you will have to prove to a bank that you have the income to meet the obligations to pay back the bond every month.
"The bank will consider ±30% of your income when they calculate your 'affordability test', and only ±50-60% of the income from rental that you collect will be added to your income."
In addition to this option, De Waal outlines two alternative solutions, namely Rent to Buy (involving an increased monthly rental for a fixed term, after which the tenant has first option on buying the property) or Instalment Sale Agreement (involving monthly payments to the seller rather than a bank for payment of the loan).
However, both these options will require the property to have been paid off completely, therefore your parents will need to settle their bond before transfer can take place.
In all situations, affordability is a vital criterion to making sure this process takes place smoothly.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
I rent a house from my parents where there are two homes on the property. I would like to put the house in my name but because I cannot show an income on paper, I can't do it.
Tenants with me on the site pay and I pay my portion every month; do you have any advice on how I can get the property in my name?
I thought of a CC but then there are more monthly fees involved with the taxman. Please help.
Mari van Wyk, Korbitec executive manager: customer relationships responds:
Property is a hugely valuable asset, as well as a large financial obligation.
As such, there is a need for regulations to ensure that those who purchase property, particularly when financing is required, are in fact in a position to fulfil their financial obligations.
Your question seems to suggest that you are only looking for one of the houses on the property to be transferred into your name.
Based on this, Meyer de Waal, from Oosthuizen & Co, explains that there are two possible options available: subdividing the property, or opening a sectional title scheme.
In both cases, your parents will then be able to transfer one of the houses into your name.
There are, of course, bank and South African Revenue Service (Sars) requirements in order to successfully achieve this.
De Waal explains that "Sars will require that you produce at least two certificates from independent estate agents to reflect the fair market valuation of the property purchased.
"However, if you need to raise finance to pay for the property you will have to prove to a bank that you have the income to meet the obligations to pay back the bond every month.
"The bank will consider ±30% of your income when they calculate your 'affordability test', and only ±50-60% of the income from rental that you collect will be added to your income."
In addition to this option, De Waal outlines two alternative solutions, namely Rent to Buy (involving an increased monthly rental for a fixed term, after which the tenant has first option on buying the property) or Instalment Sale Agreement (involving monthly payments to the seller rather than a bank for payment of the loan).
However, both these options will require the property to have been paid off completely, therefore your parents will need to settle their bond before transfer can take place.
In all situations, affordability is a vital criterion to making sure this process takes place smoothly.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
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