um can i donate one of my properties to
my daughter will i pay tax on it my
daughter will pay for the transfer fees
and registration costs what would be the
best way to give my daughter this
property and you know avoid excessive
costs in this regard bruno
[Music]
um so uh we we start getting this
question a lot especially around this
estate planning
side of things uh when when when people
start looking at where their properties
are sitting whether they're holding it
in their personal names or or whatever
the cases um so
maybe just for the sake of context
donations uh any donation uh that gets
made um has a
tax implication to it right so sars will
allow you to donate up to a hundred
thousand rand in any given year tax free
anything above the hundred thousand
range you typically looking to pay about
20 percent um 20 tax on that donation
that this is where it starts becoming a
bit scary to um you know to move
properties around and this is why we
uh
we normally so adamant
that you actually do estate planning
prior uh to buying the property because
it's a lot easier to to deal with the
problem initially um as opposed to after
after you know the situation already
arises so
but there are ways of doing it um in a
case like this um you know we do need to
ask certain questions like for example
the answer would be different if this
was a property investor versus simply a
person that has a residential property
um and uh you know just wants to move it
off to a trust or something something
along those lines uh so there's very
creative ways of doing it i don't
unfortunately we don't have the time you
know to go through the very very very
creative ways of doing it but
simplistically if you donate typically
you have pay donations tax so
what we'd be looking at doing is we'd be
looking at selling the property to for
example to a trust the reason i'm saying
trust also maybe just to take a step
back is you can do it directly to
uh to your daughter um but then
your daughter's gonna have the same
question in a couple of years time when
she wants to give it to her daughter or
something happens and she passes away
and and and um so typically speaking if
if a property is in in a family
environment and people are you know able
to benefit from this property be it by
way of occupational renting the property
out and getting rental income i normally
suggest putting it into a family trust
so that it can just sit in the family
trust especially with you know estate
planning in mind it's not a bad idea
because depending on the assets that you
have there may be some form of
justification to be able to move it to
the family trust
either way though you would probably be
looking at selling this property to the
trust or your daughter uh and
the reason i say sale is because then
it's not a donation so that's already
step one you'd be looking at doing an
outright sale skip the donation tax part
of it so that ticks one box uh but now
unfortunately sars knows that people do
this because when you sell the property
then all you do is you create a loan
account and you say i've sold the
property for a million rand so you've
now got the property but you owe me a
million rat right
and then there's ways in the books year
after year you can deal with that
million rand the problem is
people used to do this a lot with trusts
and then sars introduced certain
provisions in anti-avoidance provisions
in um like in in terms of section seven
basically saying no you're not allowed
to do that
if you
have a loan against a trust
there's an expectation that the trust
has to repay this loan to you uh without
at a certain interest rate because if it
doesn't
uh it you know we're going to consider
that portion of the interest under you
know the amount that they state as being
the the appropriate interest rate we're
going to charge you donations tax on
that
so
you know sars has become very smart to
try and avoid situations like this from
a rising so there is a bit of mess that
that you need to undertake if you do
move it to a trust if you do move it to
your daughter you can do it i mean you
can even consider doing it an
installment cell agreement for example
over a period of time where your
daughter buys it from you if you want it
outright out of your name you can
transfer it to and still have a loan
account
where she would owe you money every year
and you could possibly write this off
every year
up to the donation tax amount or the
donation allowance uh every year you
write off a little bit um and then it's
it's in her name um
typically with things like this i'd also
consider looking at things like use of
france um simply being that if if it is
your property and you live in it and you
want to stay in it uh you just want to
move it to your daughter again for
estate planning um
then you register use the front that
allows you to live on the property for
the duration of your life and if any
viewers are and sorry this is quite a
in-depth answer and it could actually be
even more in-depth so i did i do feel
like i skipped over a million things um
which just takes me back now straight to
the beginning where i go the reason why
a person might want to move properties
to begin with from an estate planning
perspective is because if a person
passes away right there's a lot of tax
and costs associated with owning assets
in your own personal name so as part of
estate planning people start trying to
move the assets across to the people
that are going to inherit them anyway
so as to avoid them growing more in
value and more cost being paid they move
it sooner rather than later and this is
why we use trust to do this planning
because then we don't worry about moving
it before death or after death because
in a trust it just stays there for
in perpetuity and you don't need to
worry about this consistent planning at
any given point um so that's just the
reason why the viewer may be asking the
question
and that's just yes i suppose some of
the suggestions but yeah get planning
and the question question goes it says
um we bought a house and we're under the
impression that our names will be
automatically registered on the
municipalities side it now turns out
that this is not the case apparently
previous owners still have to transfer
ownership and we have to change the
account into our name please advise so
fastest lives the longest who's going to
go for this one first
bruno
bruno and mute that he's like fingers
crossed
i've made the mistake way too often of
speaking while i'm on mute
now i have a system that that works at
least 95 of the time
well now you're on the board
okay uh look so it's a relatively simple
process that the conveyancers normally
assist with
to a certain degree so all that really
happens is you approach the municipality
you let them know when ownership has
passed this is normally confirmed with
the letter from the conveyances and you
hand it over to the municipality and
it's quite as simple as that the
municipality interestingly enough uh
then does their own calculations in the
background so it's quite it's quite a
strange one um but they do their own
calculations if they've been charging
the wrong account they'll reverse the
previous account that it's in the
previous person's name and charge it on
to your account um so there are a few
things in the back end that happen with
the municipality but the actual change
of details is as simple as handing a
letter over and there's people you pay
to do this so if you go to any
conveyancer with their salt they will
give you the number of someone and this
person will go and do all of this for
you so you don't have to do it yourself
[Music]
you