One person who believes in this strategy is Jason Lee, the best-selling author of Making Money Out of Property in South Africa, and two other property books. While it has its risks, like any other strategy, purchasing property to rent out is a sound investment choice whose benefits far outweigh its shortcomings. Article summary. A good option is to open a close corporation (CC). What is it and what does it entail. ... which is normally done through an estate agent. Jawitz Properties. Failure to do so will result in the CIPC assuming that the company or close corporation is no longer doing business or is not intent on doing business in the near future. Property for sale in South Africa generally goes through real estate agents, and private sales are relatively rare. Buying property through a company can be complicated! Conveyance. There is a withholding tax, whereby when immovable property in South Africa is purchased by any person from a non-resident, that purchaser (through the conveyancing attorney) must withhold the required rate until clearance is received from the South African Revenue Service (SARS) from any amount to be paid to the seller or the seller's agent (tax directives for a lower rate or an … Substantial tax advantages can be gained by purchasing South African property through a company… Upon voluntary application by the company / close corporation itself. As with any major financial decision, you should seek advice from an experienced adviser who will be able to analyse your situation and offer advice and guidance. Perhaps you made the decision to buy a property in the name of a company registered with the Companies and Intellectual Properties Commission (CIPC). Registering your property in a company allows you to, atthe time of acquisition of the immovable property, sign the agreement of sale on behalf of a company “to be formed”. 5. It's a large acquisition, lots of costs involved, so if you are in the wrong structure, it's not really easy to move the property into the appropriate structure if you made the wrong choice. … Buying property through a company – taking up shares While many of us are more familiar with situations where a property is purchased by an individual or individuals (classified as natural persons), it is also possible for a property to be purchased in the name of a legal entity, most commonly a company. However, it's not always easy to know what questions to ask. Purchase an investment property “If you’ve thought of buying a property and renting it out, you’re on the right track. Property funds buy you a stake in real estate companies listed on … In South Africa, the Western Cape province continues to outperform all other areas, with Cape Town remaining the most lucrative city in … Since companies don’t die, no estate duty is payable. Van Deventer says that STBB attorneys explain these different arguments in detail on their website: The decision as to which entity to buy your property in is a complicated legal one, it is highly recommended that the purchaser consults an attorney prior to signing an agreement of sale in order to obtain expert advice. http://www.property24.com/articles/buying-property-in-a-company/20782, Lightstone data reveals the age groups dominating property investment in SA, Property investment for retirement savings. Non-residents’ investments are not subject to South African tax. Setting up a trust is also a fairly costly exercise. 4. Guide for Foreigners Buying Property in South Africa. It’s vital to ensure the property you’re buying is in a desirable place to keep its resale value rising. We strongly urge you to update to a. The IGrow team’s key objective is to help ordinary South Africans achieve financial freedom through property investing. Receive property investment opportunities and investment news directly to your inbox. According to Wedge, one of the major benefits of buying property via a trust is separation of ownership. In certain instances, the purchaser is required to register as an entity in South Africa and, if the shares are owned by a non-resident, to appoint a public officer who is a South African resident. Non-residents buying property in South Africa should remember that it is advisable to have a separate will in South Africa for their South African assets. Perhaps you made the decision to buy a property in the name of a company registered with the Companies and Intellectual Properties Commission (CIPC). Copyright © 2020 Property24 - All rights reserved. There are 9,246 real estate listings found in South Africa. +27 (0)861 111 724. Knowledge is power and asking your estate agent the right questions could save you a great deal of money and heartache in the long run.. Registering your property in a company allows you to, atthe time of acquisition of the immovable property, sign the agreement of sale on behalf of a company “to be formed”. The documents required depend on your choice of lender and whether you’re buying the property as a private purchaser or as a company/close corporation or trust. They also cannot guarantee that the original name has not been taken by new owners, and this can encumber the whole process of reinstatement even further. Riaan van Deventer, Head of Real Estate at Engel & Völkers Southern Africa, urges all homeowners to whom this requirement would apply to take note: “Don't always presume your auditors will bring this to your attention or submit these annual returns. Legislation protects non-paying tenants, so it’s difficult to vacate your premises if your occupants can no longer keep up with rental payments. Clearly, if you ever get sued or you're in business, you have exposure - buying a property is a major purchase. They also cannot guarantee that the original name has not been taken by new owners, and this can encumber the whole process of reinstatement even further. How to buy a car under your business’s name. Buying property Seller pays for: The seller pays the agent’s commission, usually around 5%-6% of the selling price. By submitting your details via this online form, you agree to be contacted via email by the IGrow Group in relation to its property investment brands. Things to consider when buying a property in South Africa. De Beer and Claassen earnestly advises homeowners to urgently check with the CIPC to ensure their company is still ‘alive’. If annual returns are outstanding for more than 2 successive years. “It gives an individual the opportunity to invest in a range of properties through the purchase of stock. The town of Queensburgh is experiencing huge demand from first-time buyers and young families particularly in Malvern and Escombe, with homes priced under R1m selling within days if not hours of listing. Follow the link in the email to complete the registration process. If they buy an investment property for the company, the loan would be setup as follows: Borrower: ABC Pty Ltd. Mortgagor: ABC Pty Ltd (ABC Pty Ltd is the owner of the investment property). Our business model is subscription based, aimed at estate agents, rental agents, developers and commercial agents. Tel. How to buy property without a home loan It is important that there is more than one way to go about purchasing a property in South Africa, you even have options when it comes to the deposit. What they lack is the basic information to guide them through the necessary steps to follow to accomplish this. Riaan van Deventer, Head of Real Estate at Engel & Völkers Southern Africa, urges all homeowners to whom this requirement would apply to take note: “Don’t always presume your auditors will bring this to your attention or submit these annual returns. The downside of this method is that there is a higher rate of transfer duty and CGT payable than by individuals. The IGrow Wealth Group provides services that include education in property investment, financing, risk management, accounting, structuring, the administration of trusts, rental management and financial planning. Many potential investors would wish to buy property in other countries. Upon voluntary application by the company / close corporation itself. 1. Jawitz Properties is one of South Africa’s oldest residential property companies. This could have been avoided if you were legally compliant, Van Deventer explains. Property buyers should preferably not buy a house or a flat in a company, except if they want to do property development. “A trust is considered a legal entity, not a legal persona or juristic person per se and best described as a legal relationship created by a founder by placing assets under control of trustees,” he explains. Otherwise you may go to the effort of marketing the property, find a satisfied and qualified buyer, and at the stage when the transfer of the house should take place, only to then, establish that the property is not legally yours, as it has been de-registered and the transfer of property cannot take place. Agents receive a certificate annually that says they comply with the code of conduct. This could have been avoided if you were legally compliant, Van Deventer explains. When buying a property in South Africa it pays to haggle over the price, even if you think it’s a bargain. The Act makes provision to apply for reinstatement of a company, however, this is a costly and time-consuming exercise and needs to be managed by an attorney. Many property owners opted for this route in recent years so that they could use the property to generate rental income, which in turn would be ploughed back into the business account, or possibly even to protect it from creditors. If the CIPC believes that the company or close corporation has been inactive for 7 years or more. How to buy property without a home loan It is important that there is more than one way to go about purchasing a property in South Africa, you even have options when it comes to the deposit. The estate agent requests a formal letter confirming details of your offer (which can also include prospective completion dates). If you are looking to invest in property or starting your own buy-to-let portfolio and running it as a really profitable business, then you’ve come to the right place. At the time when most people used this legal vehicle, it seemed like a wise decision as it saved transfer duties, it was easier to sell shares or membership and it was used to secure a legally sound investment. Property buyers should preferably not buy a house or a flat in a company, except if they want to do property development. You can use it for transporting products, going to client meetings, and for your staff to get to and from work if their own transportation is not available. South Africa has one of the most sophisticated and accurate systems of property registration in the world. You will never become a property millionaire if you pay the taxman more than you absolutely have to. If annual returns are outstanding for more than 2 successive years. ... Here’s how the transfer of property process works in South Africa . But you might not know exactly how to buy a car under your business’s name. Buying property in South Africa Once you find your ideal property in South Africa, you need to make an offer – usually through the estate agent. Your ooba Home Loans finance expert will advise you on all the paperwork required for your particular circumstances. If buying a property through your limited company is something you have been considering, it is important to look at your long term goals as an individual, and as a company. Choose flats over houses. The downside of this method is that there is a higher rate of transfer duty and CGT payable than by individuals. CT: +27 (0)21 979 2501PTA: +27 (0)12 943 0201Email: [email protected] “While the cost of starting a trust can be significant, purchasing a property through a trust has certain advantages that many feel outweigh the cost,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. 7 sports cars you can buy in South Africa … The more supporting documents you have at the ready, the smoother – and quicker – your bond application process will be. If foreigners investing in property in South Africa later sell that property and wish to transfer funds out of the country, the local tax laws of that country will apply. Your personal data will be used to support your experience throughout this website, to manage access to your account, and for other purposes described in our privacy policy. 4. Buying property via a (Pty) Ltd Private companies purchasing immovable property pay transfer duty at a flat rate of 8% of the purchase price. Once a trust is created, all assets are placed into the trust by either the trust founder donating the assets to the trust or the trust buying the assets. Legislation protects non-paying tenants, so it’s difficult to vacate your premises if your occupants can no longer keep up with rental payments. Please contact our Property24 Support Team for further assistance. Annual financial statements must also be submitted. Do you want to know what it would be like to live it up in one of the most prestigious suburbs and estates in SA? Source: http://www.property24.com/articles/buying-property-in-a-company/20782. Estate agents in South Africa must register with the Estate Agency Affairs Board . Get in touch with a South Africa real estate agent who can help you find the home of your dreams in South Africa.. Not ready to buy yet? Purchase an investment property “If you’ve thought of buying a property and renting it out, you’re on the right track. But transactions involving the purchase by a legal entity such as a company, trust, or close corporation are dealt with slightly differently. As with any major financial decision, you should seek advice from an experienced adviser who will be able to analyse your situation and offer advice and guidance. more. It records all limitations on transferability and use of the property such as bonds and servitudes and is held by the Deeds Office. If you’re looking to buy a house in South Africa, it’s worth knowing about the Land Holdings Bill. For example, the non-resident may decide to own the property through share ownership in a company, membership in a close corporation (unique to South Africa) or as a beneficiary in a trust. Most successful investors will tell you that smaller properties, like flats, … When deciding how to register your property, it is important to know what the differences are between buying in a company, trust or as a natural person, as well as the pros and cons of each option. A trust is a legal entity created by a trust founder that can be used to purchase and own property. Ignorance of the law is no excuse, and you need to be aware of the requirement for submitting annual returns with the CIPC to avoid de-registration of your company.”. There are advantages and disadvantages to buying property in a trust and this is not a solution for everyone. A Title Deed is assigned to every property. When deciding how to register your property, it is important to know what the differences are between buying in a company, trust or as a natural person, as well as the pros and cons of each option. For the best browsing experience, update to the latest Version of Internet Explorer or try out Google Chrome or Mozilla Firefox. Visa requirements Property appreciation also warrants annual rental increases. The onus and responsibility is fully on you as the director of the company ((Pty) Ltd) or as a member of the close corporation (CC) to ensure your company's annual tax returns have been submitted on time. Van Deventer says that STBB attorneys explain these different arguments in detail on their website: The decision as to which entity to buy your property in is a complicated legal one, it is highly recommended that the purchaser consults an attorney prior to signing an agreement of sale in order to obtain expert advice, Van Deventer says. The onus and responsibility is fully on you as the director of the company ((Pty) Ltd) or as a member of the close corporation (CC) to ensure your company’s annual tax returns have been submitted on time. De Beer and Claassen earnestly advises homeowners to urgently check with the CIPC to ensure their company is still 'alive'. There are pros and cons to buying property in a trust so it is important to have a clear understanding of both before committing to this type of ownership.. As ever, when buying property in a foreign country, it is always best that you seek out reputable, English speaking representatives (legal, property, engineering etc.) The location is also a determining factor in how long a property takes to sell. Get a new mobile app for your company in 2021. However, a very important, yet unfamiliar, requirement concerning properties registered in the name of a company has been highlighted by attorney firm De Beer & Claassen: “All companies and close corporations are required by law to submit their annual returns with the Companies and Intellectual Properties Commission (CIPC) within 30 days of the anniversary date of its incorporation. SAHometraders was founded in 2002, as a property website specialising in generating leads through its national property portals, recognised in the industry as www.sahometraders.co.za. They also pay a comparably high CGT, with an inclusion rate of 50%, and an income tax rate of 28%, which translates into an effective CGT rate of 14%. If the CIPC believes that the company or close corporation has been inactive for 7 years or more. In a CC, the owners of the company are referred to as members. We welcome you to a new way of thinking about retirement, money and investing in property. 18 questions to ask your estate agent that will save you a great deal of heartache and money in the long run. If you are using Internet Explorer 8 or higher, please verify that your Internet Explorer compatibility view settings are not enabled. 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