There are a range of factors to consider when purchasing property, which can be exciting and also quite a stressful time. In South Africa, you can purchase property as an individual, trust or company with various pros and cons. We take a look at these different variables so the next time you purchase property, you are aware of the different avenues you can choose from.

Individual purchase

As the most common method of purchase, buying as an individual, you are exempt from transfer duty if you purchase for under R1 million, as well as if you are purchasing within an off-plan development. When purchasing as an individual, in your personal capacity, you are likely to receive a 100% bond when applying for a home loan. You are not liable to pay Capital Gains Tax if you use this home as your primary residence. One of the disadvantages, however, comes in when you are unable to pay your bond and can run the risk of losing the property.

Property under a company

Another legal entity to purchase property in is a company. Within a private company, you are not liable to pay transfer duty if you are registered for VAT and using the premises for business operations that it is registered for. Private companies will be liable to pay a higher Capital Gains Tax and transfer duty.

Purchasing through a trust

If you opt to purchase in a trust, your property will be assigned to a person known as a trustee who handles the administration and dealings of the property. Purchasing a home in a trust results in the investment not being held in a personal capacity, therefore will not be liable for certain fees, like transfer or estate duty upon your death. The property is also separated from your personal estate and will be protected in the event of bankruptcy. When purchasing as a trust, you must be aware that there higher Capital Gains Tax costs you will incur, and as an individual you will not have full control over your property.

No matter which option you choose, its best to talk to your conveyancer to confirm that your choice is the right one for your needs. In the long run, you need to ensure you get the most out of your property. Ridge Town Central provides the ideal choice of studio, 1, 2 or 3-bedroom apartments, which can be purchased as your residential home or an investment.