When X, recently divorced, approached her conveyancer with an instruction to register transfer of the property that was awarded to her in the divorce settlement, she was speechless when she was advised that transfer duty will be payable. This because she was advised previously that the Transfer Duty Act exempted the transfer of property to a divorced spouse in terms of a divorce order.
The advice was correct. However, what differentiated X’s position was the fact that the property was registered in the name of a trust. The exemption in the Act applies only where the one spouse held sole ownership in the whole or a portion of the property, which is then acquired by the other divorced spouse in terms of the court order. In X’s instance, transfer duty was therefore payable by her as her divorced spouse was not the owner or co-owner, but the trust.
In addition, from SARS’s point of view, the ‘transaction’ occurred on the date that the divorce order was granted and X is therefore liable to pay transfer duty within 6 months after that date, failing which a penalty on the outstanding amount at a rate of 10% per year becomes payable. Make sure to ventilate all the details of your settlement with your divorce attorney, so that you are aware of the implications.
Contact our Family Law team at firstname.lastname@example.org.