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Thinking about transferring property to your spouse in South Africa? This guide outlines the different methods, legal requirements, and tax implications involved. If you're ready to discuss your options with a qualified conveyancing attorney, use the tool below to find experienced professionals near you in Cape Town.

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How to transfer property from husband to wife

In South Africa, transferring property from a husband to a wife typically involves a legal process that may vary depending on the specific circumstances and the type of property being transferred. It's crucial to follow all legal procedures and requirements to ensure a smooth and legally valid property transfer. Here's a general overview of the steps involved:

  1. Consultation with a Legal Professional: It's advisable to consult with a qualified legal professional, such as a conveyancer or attorney, who specializes in property law. They can provide guidance on the transfer process, legal requirements, and implications; and protect the interests of both parties involved. Be sure to obtain a quote for the property transfer before you meet up.


    Get transfer quote

    By getting a transfer quote you can find out exactly what property transfer costs would be involved.

  2. Drafting a Sale Agreement or Donation: Depending on the nature of the transfer, a sale agreement or a donation agreement may need to be drafted.

    1. If the property is being sold, the sale agreement will outline the terms of the sale, including the purchase price and any conditions.

    2. If the property is beng donated, the donatIon agreement will specify that the property is being transferred as a gift.

  3. Execution of Transfer Documents: The necessary transfer documents, such as a deed of sale or donation, need to be prepared and signed by both parties. These documents will include details about the property, the parties involved, and any conditions or obligations.

  4. Payment of Transfer Costs and Taxes: Transfer costs, including transfer duty or VAT, may apply depending on the value and nature of the property transfer. It's essential to ensure that all applicable taxes and fees are paid in accordance with South African law.

  5. Registration of Transfer: The transfer of ownership must be registered with the relevant authority, typically the South African Deeds Office. This involves submitting the required documents and paying any registration fees. Once the transfer is registered, the wife will become the legal owner of the property.

Email us for a free estimate of what it would cost to transfer a property to your spouse.

Husband hands miniature house to wife at sunset

Tax considerations for spouses transferring property

When transferring property ownership between themselves there are several types of tax which may be triggered:

Transfer duty for spouses transferring property

Transfer duty is calculated against the higher of the market value and the sale price.

Donations tax for spouses transferring property

If the property is sold at a value below market value, then the difference between the market value and the sale price may be considered a donation, even if the gift is to one's child. At the time of writing up to R100,000 property donations were allowed tax free per tax year, with the excess being taxed at a rate of 20%.

However, category one donations are completely exempt from donations tax; and a donation by one spouse to another spouse is a category one donation (assuming also that the only purpose of the donation wasn't to reduce/postpone/avoid the payment of tax).

Capital Gains Tax for spouses transferring property

Section 9HB of the Income Tax Act sets out how the taxation works when property (or any other asset) is transferred between spouses. If the spouse who is disposing of the property (ie transferring it to the other spouse) is South African, then there is a roll-over of a capital gain or loss when the property is transferred between spouses; this means that the payment of capital gains tax is deferred until the receiving spouse eventually disposes of the property. The rollover/deferrment of capital gains/losses is not optional. The disposal is effectively deemed to have taken place at the base cost of the property/asset (usually this is the amount the property was originally purchased for).

Usually when you sell property capital gains tax is calculated based on the difference between the sale price and the orginal purchase price. Howeve, if SARS believe the transaction was between connected people, such as family, they will use the market value at the date of sale, and not the sale price. If the property is your primary residence, then some of the gain is exempt from capital gains tax (otherwise none is exempt).

Income tax for spouses transferring property

The receiving spouse needs to consider whether receiving the property constitutes part of their “gross income” and thus whether income tax is applicable. Donations are usually considered to be capital in nature; thus not part of "gross income" and not subject to income tax. 

Gifting vs Bequeathing : Estate duty

An alternative to donating the property to your wife is to bequeath the property to her in your last will and testament. You will want to careful weigh up the different tax implications of the two approaches (e.g. whilst there is no transfer duty applicable on a property inherited from a a deceased estate, there may be estate duty). Note that estate duty is calculated on the entire estate, not just the property value. At the time of writing estate duty was :

Husband handing miniature property to wife

Usufruct vs Outright sale

An alternative to an outright sale is to provide your wife with a lifetime usufruct, providing her with the rights to live in the property until her death, with ownership reverting to the bare dominium holders after her death. This has its own set of tax and cost implications. If you would like your children to ultimately inherit the property once your wife passes, you would make them the bare dominium holders.

Notarial deed of cession of usufruct

Property Buy/Sell/Transfer/Usufruct



















FAQ on cashless property transfers

Parent to child transfer

Donations tax

Donations tax is payable by the donor (seller); but if the seller fails to pay the donations tax then both the seller and buyer become jointly liable for it. If a parent donates a property to their child donations tax applies under sections 54 to 64 of the Income Tax Act (0% up to R100k, 20% up to R30m, 25% above R30m).

So the property needs to be sold to avoid donations tax; either directly to the child or to a family trust. If the property is sold below its fair market value SARS may deem it to be a partial donation; so it needs to be sold at its market value to avoid donations tax.

Sale and loan

If the parent sells the property and simultaneouslly loans the amount to the child; the loan will need to grow at a market related rate so that it's not considered a donation (check what the official SARS rate is). If the loan is at too low an interest rate SARS may treat the forgone interest as a donation under Section 7C of the Income Tax Act, taxing it at 20%/25% annually (unless it falls below the R100,000 .per annum donations exemption).

Installment Sale with annual loan write-off

The parent could consider an installment sale to the child; simultaneously entering into a loan but writing off an amount of the loan each year which is below the annual threshold for donations tax (R100,000 at the time of writing). Over time, the loan is fully forgiven without tax.

Document the loan properly

The loan must be documented properly, as SARS may scrutinise the arrangement to ensure it’s not a disguised donation.

Transfer duty

The child is liable for transfer duty if the child acquires the property while the parent is still alive; which contrasts with inheritance where no transfer duty is payable. Note that no transfer duty is payable for properties worth less than R1.1m at the time of writing (likely to increase to R1.21m).

The trust would have to pay transfer duty.

Connected people

Any relative of a natural person meets SARS's definition of "connected people"; SARS regards related-party transactions bas being more likely to be open to manipulation, so they are likely to require 1 to 3 independent valuations of the property (there's a fee involved in getting a valuation). Note that the property can be sold for whatever amount the buyer and seller agree to; but the market value will be used to determine transfer duty, CGT and donations tax.

Trusts' have higher tax rates

Trusts are also taxed at a higher rate so future income or capital gains in the trust could be costly unless distributed to beneficiaries (like the child).

Capital Gains Tax

The parent may incur capital gains tax if the property’s sale price exceeds its base cost (original purchase price adjusted for improvements and inflation); with it being less if it's the primary residence of the parent.

Usufructs

Usufructs are worth considering if the parent still wants to stay in the property until they die.

Inheritance

The efficiency of the above arrangement should be weighed againt the costs if bequeathing the property; this avoids transfer duty but estate costs and estate duty may come into play.

Husband handing a miniature house to his wife

Property transfer & sale Info

Sellers of property & buyers, speak to a property lawyer before you hire an estate agent!

Conveyancing & property transfer discussion forum

Note that this is a public forum - exercise caution before acting on info and use at own risk. Anybody may ask and answer, and you don't know what their level of expertise is. No information on this website should be acted on without first consulting with a lawyer to test its validity. Do not share private details here.



Spousal transfer of property checklist - find best property lawyer, should it be purchased, donations tax, capital gains tax transfer duty