Under South African law, the acquisition of immovable property is ordinarily subject to the payment of transfer duty. Transfer duty is based on the value of the property and calculated on a sliding scale, making it a significant additional cost for new owners. Fortunately, however, the Transfer Duty Act (‘the Act’) contains various exemptions.
According to section 9(1)(e) of the Act, property inherited from a deceased estate is exempt from the payment of transfer duty. As such, heirs and legatees are not required to pay this tax in order to take transfer of the property they’ve inherited – provided two conditions are satisfied. First, the property must have been inherited in terms of a valid will, redistribution agreement, or the rules of intestate succession. Second, the property must be transferred directly from the estate of the deceased to the beneficiary. Consequently, transfer duty will be payable if the property is first transferred to a third party – for whatever reason – before it is transferred to the beneficiary.
Although the payment of transfer duty is exempt in these circumstances, the estate will still be liable for various fees, including the conveyancing fees, the cost to settle and cancel the bond, and outstanding municipal rates and levies, if applicable.
For a clear and comprehensive outline of the costs and processes associated with an estate transfer, reach out to our estate law experts at estates@stbb.co.za.
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