Property bill offers new chance

Johannesburg - A new tax amendment tabled in parliament, which applies to people who hold their primary residences in companies and trusts, will probably only be passed into law in early 2010.

Originally the amendment was supposed to affect only residences owned by companies, but it is has been confirmed to include trusts as well.

The amendment will allow taxpayers to transfer primary residences held in a trust or company into their own name, with no tax penalty payable.

However, this applies only to those who have lived in their primary residences since February 11 2009, who need to take advantage of the tax relief before December 31 2011.

Robert Gad, a director in the tax department of Edward Nathan Sonnenberg (ENS), said this is an opportunity to weigh up the advantages and disadvantages of moving property out of a trust or company.

"In the current environment affecting financial institutions, not all interest rates and bonds are as favourable or as easily obtainable as they have been," he said. He added that moving property could have a negative financial impact.

Head director of ENS property department Allison Alexander said: "It is recommended that in instances where the trust or company has registered a bond over the property, a discussion takes place with the financial institution as to whether the proposed new owner could be substituted as debtor under the existing bond.

"This would reduce the bond costs by half as well as other costs imposed, such as the deeds office levy, which is less for individuals."

- Fin24.com