Tag Archives: Transfer

Property

WHY IS MY PROPERTY TRANSFER TAKING SO LONG?

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After signing a deed of sale, the purchasers often want to move into the property as soon as possible.  When they are informed of the process involved prior to the property being transferred this may damper their excitement. There may also be delays in the transaction.   In order to avoid unnecessary frustration, it is vital that parties to the transaction understand the processes involved and that delays are sometimes inevitable.

The deed of sale will normally be the starting point in a transaction for a conveyancer who has been instructed to attend to the transfer.  This conveyancer is also known as the transferring attorney and is normally the main link between the other attorneys involved the transfer transaction.

Postponements, delays and interruptions

  1. A major role of the conveyancer is informing any mortgagees, for example banks, about the transfer so that any notice periods for the cancellation of bonds can start running. The notice period is usually up to 90 days. The transfer may be delayed as a result of this notice period.
  1. Obtaining the various certificates, receipts and consents applicable to the transaction in question also takes time. Examples of these is the rate clearance certificate, transfer duty receipt, homeowners’ association’s consent to the transfer, levy clearance certificate, electrical compliance certificate and plumbing certificate. The time it takes to obtain these certificates will differ from case to case. After an inspection by a plumber or electrician, for example, it may be found that certain work needs to be carried out before the certificates will be issued.
  1. Once all the documents are lodged at the Deeds Office by the conveyancer, an internal process is followed, which has different time frames in the various Deeds Offices. This time frame can also vary in a particular Deeds Office. It is best to enquire from your conveyancer what the Deeds Office time frame is at any given stage.

There are many ways in which the transfer process could be delayed, these are just some of the examples. If you feel that the process is taking too long, then you should contact your conveyancer.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. (E&OE)

Reference: Aktebesorging, UNISA 2004, Department Private Law, Ramwell, Brink & West

Property, SARS

TRANSFER OF A PROPERTY: IS VAT OR TRANSFER DUTY PAYABLE?

A purchaser is responsible for payment of transfer cost when acquiring an immovable property, but it should further be established if the transaction is subject to the payment of VAT or transfer duty to SARS.

When an immovable property is transferred, either VAT or transfer duty is payable. To determine whether VAT or transfer duty is payable one should look at the status of the seller and the type of transaction.

VAT
If the seller is registered for VAT (Vendor) and he sells the property in the course of his business, VAT will be payable to SARS. A vendor is a person who runs a business and whose total taxable earnings per year exceed R1 000 000. He will then have to be registered for VAT. A further stipulation is that the property that is being sold must be related to his business from which he derives an income.

The Offer to Purchase should stipulate whether the purchase price includes or excludes VAT. If the Offer to Purchase makes no mention of the payment of VAT and the seller is a VAT vendor, it is then deemed that VAT is included and the seller will have to pay 14% of the purchase price to SARS. It is the seller’s responsibility to pay the VAT to SARS, except if the contract stipulates otherwise.

When a seller is not registered for VAT, but the purchaser is a registered VAT vendor, the purchaser will still pay transfer duty but can claim the transfer duty back from SARS after registration of the property.

Transfer duty
When the seller is not a registered VAT vendor it is almost certain that transfer duty will be payable on the transaction. A purchaser is responsible for payment of the transfer duty. Transfer duty is currently payable on the following scale:

  1. The first R600 000 of the value is exempted from transfer duty.
  2. Thereafter transfer duty is levied at 3% of the value up to R1 000 000.
  3. From R1 000 001 to R1 500 000, transfer duty will be R12 000 plus 5% on the value above R1 000 000.
  4. On R1 500 001 and above transfer duty is R37 000 plus 8% on the value above R1 500 000.

Transfer duty payable by an individual or a legal entity (trust, company or close corporation) is currently charged at the same rate.

Transfer duty is levied on the reasonable value of the property, which will normally be the purchase price, but should the market value be higher than the purchase price, transfer duty will be payable on the highest amount. Transfer duty is payable within six months from the date that the Offer to Purchase was signed.

In instances where a party obtains a property as an inheritance or as the beneficiary of a divorce settlement, the transaction will be exempted from payment of transfer duty.

Where shares in a company or a member’s interest in a close corporation or rights in a trust are transferred, the transaction will be subject to payment of transfer duty if the legal entity is the owner of a residential property.

Zero-rated transactions
This means that VAT will be payable on the transaction but at a zero rate. If both the seller and the purchaser are registered for VAT and the property is sold as a going concern, VAT will be charged at a zero rate, for instance when a farmer sells his farm as well as the cattle and the implements.

Exemption
Transfer duty, and not VAT, will be payable when a seller who is registered for VAT sells a property that was leased for residential purposes.

It is thus important for a purchaser to establish the status of the seller when buying a property. The seller who is registered for VAT should carefully peruse the purchase price clause in a contract before signing, to establish if VAT is included or excluded.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.