The transfer process can take up to three-months, sometimes longer. There are different steps involved in the transfer of a property, these include:

1. Instruction

A conveyancer receives the instruction to transfer the property.

2. Communication

The conveyancer communicates with the various role-players involved in the transfer process, such as the seller, purchaser, transfer and bond attorneys, municipality, bank, South African Revenue Service (SARS).

3. Collection

Certain information and documents are required, such as the agreement of sale, deeds office search, existing deed, bond cancellation figures from the bank and so on. The conveyancer should continuously report to the various role-players about the progress being made.

4. Drafting and signing

As soon as all the information and documents have been collected, the conveyancer will draft the transfer documents and request the seller and purchaser to sign them. These transfer documents will include a power of attorney and various affidavits.

5. Finances

Financial arrangements include requesting an advance payment for the conveyancer’s interim account for certain expenses, requesting the bank guarantee, collecting the purchase price or deposit and so on.

6. Transfer duty

Obtaining a transfer duty receipt from SARS, confirming that the tax relating to the transfer of the property has been paid by the purchaser.

7. Clearance certificate

Obtaining a clearance certificate from the municipality, confirming that all amounts in respect of property have been paid for the last two years.

8. Prep

The conveyancer prepares for lodgement (submission) of the deed of transfer and other documents necessary for registration at the deeds office.

9. Registration

Once the deed of transfer and other documents have been lodged it, takes the deeds office about 7 – 10 working days to examine these documents. If the deeds office is satisfied that the requirement for the transfer of property has been met, the deed of property is registered. The conveyancer will notify the various role-players of the registration.

10. Accounts

Once registered, the conveyancer makes the necessary calculations and payments relating to the sale, for example, the estate agent’s commission, purchase price and so on. The conveyancer’s final account is also drawn up and sent to the purchaser and the seller for payment.

Having an experienced and expert conveyancer is extremely important to ensure that the transfer of property takes place quickly and efficiently.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

The post IMPORTANT STEPS FOR THE TRANSFER OF PROPERTY appeared first on Schnetler's Inc.

The transfer process can take up to three-months, sometimes longer. There are different steps involved in the transfer of a property, these include:

1. Instruction

A conveyancer receives the instruction to transfer the property.

2. Communication

The conveyancer communicates with the various role-players involved in the transfer process, such as the seller, purchaser, transfer and bond attorneys, municipality, bank, South African Revenue Service (SARS).

3. Collection

Certain information and documents are required, such as the agreement of sale, deeds office search, existing deed, bond cancellation figures from the bank and so on. The conveyancer should continuously report to the various role-players about the progress being made.

4. Drafting and signing

As soon as all the information and documents have been collected, the conveyancer will draft the transfer documents and request the seller and purchaser to sign them. These transfer documents will include a power of attorney and various affidavits.

5. Finances

Financial arrangements include requesting an advance payment for the conveyancer’s interim account for certain expenses, requesting the bank guarantee, collecting the purchase price or deposit and so on.

6. Transfer duty

Obtaining a transfer duty receipt from SARS, confirming that the tax relating to the transfer of the property has been paid by the purchaser.

7. Clearance certificate

Obtaining a clearance certificate from the municipality, confirming that all amounts in respect of property have been paid for the last two years.

8. Prep

The conveyancer prepares for lodgement (submission) of the deed of transfer and other documents necessary for registration at the deeds office.

9. Registration

Once the deed of transfer and other documents have been lodged it, takes the deeds office about 7 – 10 working days to examine these documents. If the deeds office is satisfied that the requirement for the transfer of property has been met, the deed of property is registered. The conveyancer will notify the various role-players of the registration.

10. Accounts

Once registered, the conveyancer makes the necessary calculations and payments relating to the sale, for example, the estate agent’s commission, purchase price and so on. The conveyancer’s final account is also drawn up and sent to the purchaser and the seller for payment.

Having an experienced and expert conveyancer is extremely important to ensure that the transfer of property takes place quickly and efficiently.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

The post IMPORTANT STEPS FOR THE TRANSFER OF PROPERTY appeared first on Schnetler's Inc.

A purchaser is responsible for payment of transfer cost when acquiring an immovable property, but it should further be established if the transaction is subject to the payment of VAT or transfer duty to SARS.

When an immovable property is transferred, either VAT or transfer duty is payable. To determine whether VAT or transfer duty is payable one should look at the status of the seller and the type of transaction.

VAT
If the seller is registered for VAT (Vendor) and he sells the property in the course of his business, VAT will be payable to SARS. A vendor is a person who runs a business and whose total taxable earnings per year exceed R1 000 000. He will then have to be registered for VAT. A further stipulation is that the property that is being sold must be related to his business from which he derives an income.

The Offer to Purchase should stipulate whether the purchase price includes or excludes VAT. If the Offer to Purchase makes no mention of the payment of VAT and the seller is a VAT vendor, it is then deemed that VAT is included and the seller will have to pay 14% of the purchase price to SARS. It is the seller’s responsibility to pay the VAT to SARS, except if the contract stipulates otherwise.

When a seller is not registered for VAT, but the purchaser is a registered VAT vendor, the purchaser will still pay transfer duty but can claim the transfer duty back from SARS after registration of the property.

Transfer duty
When the seller is not a registered VAT vendor it is almost certain that transfer duty will be payable on the transaction. A purchaser is responsible for payment of the transfer duty. Transfer duty is currently payable on the following scale:

1. The first R600 000 of the value is exempted from transfer duty.
2. Thereafter transfer duty is levied at 3% of the value up to R1 000 000.
3. From R1 000 001 to R1 500 000, transfer duty will be R12 000 plus 5% on the value above R1 000 000.
4. On R1 500 001 and above transfer duty is R37 000 plus 8% on the value above R1 500 000.

Transfer duty payable by an individual or a legal entity (trust, company or close corporation) is currently charged at the same rate.

Transfer duty is levied on the reasonable value of the property, which will normally be the purchase price, but should the market value be higher than the purchase price, transfer duty will be payable on the highest amount. Transfer duty is payable within six months from the date that the Offer to Purchase was signed.

In instances where a party obtains a property as an inheritance or as the beneficiary of a divorce settlement, the transaction will be exempted from payment of transfer duty.

Where shares in a company or a member’s interest in a close corporation or rights in a trust are transferred, the transaction will be subject to payment of transfer duty if the legal entity is the owner of a residential property.

Zero-rated transactions
This means that VAT will be payable on the transaction but at a zero rate. If both the seller and the purchaser are registered for VAT and the property is sold as a going concern, VAT will be charged at a zero rate, for instance when a farmer sells his farm as well as the cattle and the implements.

Exemption
Transfer duty, and not VAT, will be payable when a seller who is registered for VAT sells a property that was leased for residential purposes.

It is thus important for a purchaser to establish the status of the seller when buying a property. The seller who is registered for VAT should carefully peruse the purchase price clause in a contract before signing, to establish if VAT is included or excluded.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

The post TRANSFER OF A PROPERTY: IS VAT OR TRANSFER DUTY PAYABLE? appeared first on Schnetler's Inc.