Tax Amnesty for Property Owners
The advantage of transferring your property into your personal name is that natural persons do not pay capital gains tax (CGT) on the sale of his/her primary residence, subject to the following conditions:
- If the proceeds of the sale exceeds R2 million, the first R1,5 million profit or loss is not subject to CGT.
- If the proceeds do not exceed R2 million, the full amount is exempt from CGT.
Companies, CC’s and Trusts do not possess primary residences, therefore the full profit is subject to CGT. For example, if the capital gain (selling price minus base cost of property) of a Company, CC or Trust is R1 million, 50% of the capital gain of R1 million, ie R500 000.00, is added to the income of the Company, CC or Trust. If there is no other income, the R500 000.00 would represent the income of the Company, CC or Trust. The amount of tax levied would depend on the tax rate of the body concerned.