THE COST RELATING TO THE TRANSFER/ PURCHASE
OF A FIXED PROPERTY
TRANSFER DUTY
Where Transfer Duty is payable, a formula is
applicable based on the value of the property.
Transfer Duty normally constitutes the majority of
the costs and is usually payable by the Purchaser.
Transfer Duty is also payable on the transfer of a
member's interest or shares in a company or
beneficial interest in a trust. Where the Purchaser
of the interest or shares is a natural person,
Transfer Duty is charged on a sliding scale while an
entity other than a natural person pays Transfer
Duty at a flat rate of 10% of the purchase price.
VAT
No Transfer Duty is payable if the Seller is
registered as a VAT vendor on date of registration,
in which event the Seller is liable to make payment
of the VAT, charged at 14%, to the Receiver. The VAT
is deemed to be included in the purchase price,
unless specified to the contrary in the agreement.
In the latter event the Purchaser will have to pay
the VAT in addition to the purchase price.
RATES AND LEVIES top
Whilst not a cost of transfer, rates and levies must
be paid in full on date of transfer. A pro rata
(normally to date of possession) portion of the
charges is payable on the fixed property to the
relevant local authority or the levies payable to
the Body Corporate in the case of a sectional title
unit.
FEES
The Conveyancer's fees are prescribed by a tariff
and are calculated on a sliding scale based on the
purchase price. The Purchaser is usually liable for
payment thereof together with VAT thereon.
INFORMATION ON THE CONVEYANCING PROCESS
"CONVEYANCING" describes the legal process whereby a
person, company, close corporation or trust becomes
the registered and lawful owner of fixed property
and ensures that such ownership cannot be
challenged. It also encompasses the process of the
registration of Mortgage Bonds.
A Conveyancer is an attorney who by law is the only
person who can register fixed property transfers.
This is necessary to ensure the protection of the
various interests the parties have in the
transaction and to maintain the high standard of
land registration.
The first requirement is a valid Agreement of Sale.
This is a written agreement which is signed by both
the Purchaser and Seller (and by the Seller's spouse
in cases where the parties are married in community
of property, or account to the laws of a foreign
country). A written "Offer to Purchase" signed by a
Purchaser and accepted by a Seller also constitutes
a binding agreement. An oral contract for the sale
of fixed property is invalid.
The Agreement of Sale/Offer to purchase is handed to
the appointed Conveyancer, who will draft the
necessary documents. Both the Seller and the
Purchaser will be required to call at the offices of
the Conveyancer to sign the necessary documents. The
documents to be signed include the following:
- A Power of Attorney to Pass Transfer
- Declaration in respect of Marital Status, Identity
Number and Insolvency
- Transfer Duty and Value Added Tax (VAT) Declaration
- FICA Documents
- Bond Documents, if a Mortgage Bond is to be
registered
FEES &
CAPITAL GAINS TAX
BOND REGISTRATION COSTS
Conveyancer's fees are calculated on a sliding scale
based on the amount of the bond and are payable by
the Purchaser to the Conveyancer who registers the
bond.
BOND CANCELLATION COSTS
If the Seller has a bond registered over the
property, this must be cancelled on transfer and the
Seller is responsible for payment of the
Conveyancer's fees for cancellation.
CAPITAL GAINS TAX (CGT)
Capital Gains Tax is a tax payable on the profit a
Seller makes when a property is disposed of, and not
on the entire value of the property.
The Profit (Capital Gain) is calculated by deducting
the base cost of the property from the proceeds on
disposal of the property. Disposal includes sale,
donation, exchange, vesting the property in the name
of a beneficiary of a trust.
The amount of CGT payable depends entirely on the
entity that owns the property.
Non-Residents are also liable for the payment of CGT.
Please Note:
This very short introduction to Capital Gains Tax
does not purport to contain a complete summary of
the Capital Gains Tax Provisions.
Information
supplied by s t r b Smith Tabata Buchanan Boyes
Attorneys.
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