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| All contracts to acquire immovable property must be in writing, and signed
by both buyer and seller.
Estate Agents will draw up this contract which is called an Offer to
Purchase. Once signed this
constitutes a valid and legally binding contract from which neither party
can withdraw without incurring legal
consequences, save for certain instances where the agreement is subject to
certain conditions
which are either fulfilled/not fulfilled. Mortgages for Non-residents A non-resident may only borrow up to a maximum of the amount he invests into the purchase of the property, which translates into a 50% loan. There is a registration cost levied on Bonds which is dependent upon the value. Transferring the property from Seller to Buyer The registration of property is completed by a specifically qualified legal practitioner, known as a conveyancer. It is customary for the Seller to appoint the conveyancer and the Purchaser to pay the costs. The conveyancer prepares the transfer documentation which, after signature by the Purchaser and Seller, is lodged together with the cancellation of any existing mortage bonds and new mortage bonds to be registered in a regionally located Deeds Registry. The deeds are subject to an examination process whereafter they are made available for registration. On date of registration of transfer all existing mortage bonds registered over the property are cancelled simultaneously with the registration of any new mortgage bonds by the Purchaser in favour of the bank granting financial assistance. The Purchaser is recorded as the new owner of the property and the purchase price is paid to the Seller Transfer Duty The Purchaser is responsible for the payment of these fees unless purchasing new property directly from a developer whereby by developer is VAT registered. Transfer Duty is payable to the Receiver of Revenue. Commission Commission is payable where an estate agent is the effective cause for concluding a sale of the property. It is customary that the Seller is responsible for this fee. Exchange Control All funds introduced from outside South Africa to acquire fixed property within South Africa may be repatriated together with any profit on resale of the property. It's not law, but facilitates the repatriation of funds, if the title deed is endorsed "non resident". Capital Gains Tax Capital Gains Tax (CGT) became effective on 1 October 2001 and South African residents are liable for the payment of Capital Gains Tax (CGT) on the disposal of any asset from that date, subject to certain limited exceptions. Non-residents are only liable to pay CGT on the disposal of the following: Immovable property situated in South Africa, including any right or interest in immovable property. Assets of a permanent establishment of a non-resident through which trade is carried on in SA. - With individuals; 25% of the Gain is taxable in their hands for the tax year in which it is disposed. The first R1.5 million Gain is exempt from CGT if the property is the primary residence of the individual. This Rebate does not apply to non-residents. - With Juristic persons (Companies, Closed Corporations); 50% of the Gain is taxable in the hands of the Juristic person for the tax year in which it is disposed. Companies are taxed at a flat rate of 28%. In addition thereto one must bear in mind the secondary tax on Companies (STC) which can become payable on the dividends payable to Shareholders and Members. - With Trusts, 50% of the Gain is taxable in the hands of the Trusts for the tax year in which it is disposed. Trusts are taxed at a flat rate of 40%. General Whilst every care has been taken in providing the above guide lines, the appropriate proffessional person, should be employed. |
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