Thursday, January 20, 2011

Transfer of properties from cc

The tax exemption deadline for transferring properties registered in the name of a close corporation, company or trust to the members of the entity has been extended to this December 2011.

The benefit of transferring a property to the member is that the transfer would be free of transfer duty, capital gains tax, secondary tax on companies and income tax in terms of Para 51 of the 8th Schedule of the Income Tax Act following a recent amendment to the Income Tax Act and subject to the deadline mentioned above.

An example is a property owned by a cc which is being sold for R900 000,00. If the property was to be sold out of the cc, the cc would make a profit, which profits are taxed as well as the capital gain - the difference between the selling price and the cost price. In the example our office is handling this tax amounts to R137 454,00.

If the exemption is used and the property is first transferred to the members and then sold (transfer can be done simultaneously) the tax payabe is R6256 - a considerable difference.

So if you own a property in a corporation, company or trust, discuss with us the best way to save taxes and take action now before the exemption falls away.

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