The amendments apply to transactions concluded on or after 13 December 2002.
They introduce the concept of "residential property", defined as
"any dwelling-house, holiday home, apartment or similar abode, improved or unimproved land zoned for residential use in the Republic" but excluding "an apartment complex, hotel, guesthouse or similar structure consisting of five or more units held by a person which has been used for renting to five or more persons, who are not connected persons," and "any "fixed property" of a "vendor" forming part of an "enterprise" as defined in the Value-Added Tax Act.
If the disposal of a residential property, as defined, falls under one of the following transactions, then transfer duty will be payable.
1) The disposal of shares in a company, where more than 50% of the total assets of such company consist of residential property, or
2) Similarly, the disposal of a member's interest in a CC, if more than 50% of the total assets of such CC consist of residential property, or
3) The disposal of a contingent right to a residential property owned by a discretionary trust, whether owned directly by such trust, or owned indirectly by virtue of such trust holding the shares in a company of which more than 50% of the total assets consist of residential property.
The impact of this legislation could be quite severe. In the article, A not so happy New Year by Ben Strauss in the January/February 2003 edition of De Rebus, Mr Strauss investigates the effect of this legislation. Johann Benade does the same in his article, Transfer duty shock for prospective homeowners, in Moneymax.
Full article on moneymax.co.za