CONVEYANCING ROLE PLAYERS (II)

CONVEYANCING ROLE PLAYERS | THE MUNICIPAL COUNCIL

(MF ATTORNEYS)

Last week we looked at the role that the South African Revenue Services (SARS) plays in the property transfer process.  This week we will look at the municipal council, their requirements and the potential challenges that occasionally occur in the transfer process.

The Municipal Council

Dealing with the local municipality is always infamously riddled with bureaucratic hurdles, hoops and challenges. In order to minimize the delay from this institution during the transfer process, certain firms have appointed internal office members to attend to the council on a daily basis in order to resolve issues when obtaining rates clearance figures, whilst other firms make use of rates consultants.  These extra measures have become a necessity due to the various challenges that Transferring Attorneys are experiencing when attempting to obtain rates clearance certificates. The costs involved for these are usually for the seller’s account as the seller is the party responsible for obtaining rates figures and effecting payment of the rates amount, four months in advance.

Whenever a property is sold, the municipality needs to confirm that all the rates have been paid in full.

CONVEYANCING ROLE PLAYERS (I)

CONVEYANCING ROLE PLAYERS | SARS

Conveyancing Role Players - another piece in the puzzle...

(MF LEGAL)

There are various role players in the transfer process, namely; SARS, the council, the Body Corporate (sectional title) or a Home Owners Association (cluster), bond cancellation attorneys and bond attorneys, and their respective clients being the banks that they service. Today we will look at the role that SARS plays and its requirements as well as potential challenges that can play a role in the transfer process.

South African Revenue Services (SARS)

SARS is an important role player because they issue the transfer duty receipt or transfer duty exemption certificate. Without this document the matter cannot be lodged in the deeds office. 

SARS requires the offer to purchase in order to confirm the purchase price and to ensure that the amount of duty payable is correct.  They also check the tax history of the seller, purchaser and agent/agency involved.  If any one of these parties’ tax is not in order, SARS can refuse to grant a transfer duty receipt or exemption, and thereby delay the transfer. 

CAPITAL GAINS TAX 2013

implications for the real estate sector 

(MF LEGAL)

The 2012 budget speech, delivered by Pravin Gordhan on 22 February, has left some relieved and others a bit disappointed.  Some are feeling like they will be stretched while the small business sector will be feeling relieved by the reduction in certain taxes.  Capital gains tax is one of the taxes that effects the property industry where individuals, or entities, dispose of property registered in a Close Corporation/Company or is over a certain threshold.

Previously this rate of interest for an individual was 10% but from March 2012 it will increase by 3.32%.  Companies will also see and increase to 18.65% from the previous 14%.  Essentially, what this means is that when individuals and companies dispose of assets they will be liable to pay capital gains tax.

In other areas, the rebate on a primary residence has been increased from R1,5m to R2m.  When an individual sells their primary residence, they will pay capital gains tax on the amount over and above the R2m rebate.  A primary residence is any residence where the seller ordinarily resides, which he uses for domestic purposes.  These provisions would generally apply to those possessing properties that have accumulated vastly in value since they were bought.  However, looking at the current property market a large number of property owners will find themselves exempt from this tax.

If you need help or advice on taxation or financial planning within the real estate sector, contact us at Rivigan Property Group for more information.