Tax and homeownership

9 March 2006

Nowadays it is seldom advantageous (from a tax point of view) to register ownership of a private home in the name of a trust, close corporation or a company. The once popular practice and its advantages have been closed down by SARS. Despite these tax downsides (e.g. legal entities pay 8% as opposed to the sliding scale of 0 to 8%, no Capital Gains Tax exception, and secondary taxes), there are still valid reasons for using such entities for home ownership. For instance, a trust protects assets from future creditors and is a useful estate planning tool.

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