Transfer Your Home

If you transfer your home to yourself from a CC, a Trust or a Company, will you qualify for the new bond?

The new SA Revenue Services ruling allowing those living in primary residences to transfer the ownership from companies, close corporations or trusts into their own name without paying transfer duty or capital gains tax (if they act before 2012) has, says Mike Greeff, CEO of Greeff Properties, been widely praised.

But, he says, those hoping to take advantage of this (which can bring about significant tax savings) should take note that if the property is mortgaged, they will have to cancel their existing bond and reapply for a new one.

"This," says Greeff, "could lead to problems: firstly you are unlikely to get the same low interest rates of yesteryear, thereby partially cancelling out the tax advantages and, secondly, you could find that, under the far more stringent NCA criteria, you do not qualify for a bond of the right size. This could leave you in limbo in which the property has to be sold fast."

Those going the private individual ownership route, says Greeff, should take note, too, that the costs of cancelling a bond and registering a new bond as well as the banks' initiation fee can be high. What is more, if the change is made without giving three months notice to the bank penalties can be charged. In the circumstances, he says, it will pay to talk to the banks and/or bond originators before making a decision.

The Deeds Registration Act of 1937, says Greeff, does allow for the substitution of one mortgagor by another (at a 50% reduced fee) but banks have traditionally been wary of doing this as they appear to think that the security of the deal is in some way threatened.

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