In terms of Section 9 (20) of the Transfer Duty Act, 1949 read together with paragraphs 51(1) and (2) of the Income Tax Act, 1962 SARS has now provided an exemption which allows individuals to transfer properties registered in legal entities into their own names without incurring adverse tax liabilities.

These transfers will be exempted from Transfer Duty and it is advisable to consider making use of this exemption as it might be in your interest to rather have your primary residence registered in your personal name.

To qualify for this exemption the following criteria must be met:

a)                   The property must have been owned by the Close Corporation, Company or Trust prior to or from 11 February 2009;

b)                  The Purchaser alone or together with his or her spouse must have personally and ordinarily resided in that residence and used it mainly for domestic purposes as his or her or their ordinary residence from 11 February 2009 to the date of registration;

c)                   The Purchaser alone or together with his or her spouse must hold all the share capital or members interest in that legal entity from 11 February 2009 to the date of registration;

d)                  The property may not be more than 2 hectares in extent;

e)                  If a Trust is the registered owner of the property then the trust must have acquired the property from the Purchaser by way of donation, settlement or other disposition or he must have funded the acquisition and payment of the bond instalments;

One should take all factors into consideration before deciding if this would be in your best interest, for example estate planning and the reasons for the transfer in the name of the legal entity in the first place.  Where a mortgage bond is registered over the property one must consider whether the financial institution who granted the bond will want to re-assess the loan due to the NCA and the current economic circumstances.

To make use of this exemption the registration of transfer must be effected by 31 December 2011 so we suggest you contact us or your auditor to consider whether this would be in your best interest.