The transfer of shares in a property-owning company is treated differently to the transfer of a membership in a closed corporation.
So says Lanice Steward, MD of Anne Knight Porter Frank (APKF), discussing a recent news release by Smith Tabata Buchanan Boyes. She says this information is especially relevant where two or more people share the ownership of a property.
“Supposing a 20% share is sold to a private individual by the company owning one property worth R1,2m. The transfer duty on the sale would be R41k, i.e. 20% of the transfer duty that would be paid on the whole property if it was sold.”
When a member’s interest in a CC is sold, but the duty here is calculated only on the value of the interest sold, i.e. on R240k in the case of a property worth R1,2m.
As this would be below the R500k purchase price it will be totally exempt from any duty.
“Any property in which one or more of the shareholders’ shares is likely to be worth less than R500k at the time of the purchase is therefore better vested in a CC than in a company.”