Capital Gains Tax: Trusts vs Individuals

Author: Rigard Sevenster (Fiduciary Specialist at Glacier by Sanlam.) Many financial planners, and the general public at large, have expressed concern regarding when and to what extent they or their trust is liable for capital gains tax (CGT). Knowing the different tax treatments will assist in choosing how to structure your estate and trust more effectively. In this article we highlight some of the most important differences in CGT from either a trust or an individual’s perspective.

How tax can affect your residential property investment

Returns, pitfalls and tax breaks in a nutshell Tax can make or break the potential returns from an investment in residential property. To benefit from possible tax breaks while avoiding the pitfalls, investors should be aware that different investment vehicles can significantly increase or reduce their tax liability. In this article we focus on the purchase of property for the purpose of earning a return rather than for use as a primary residence.

Capital gains tax and the primary residence exemption

Is it true that globally mobile employees can sell their homes and not pay capital gains tax even if they rented it out for a number of years? It is true in most cases. The general rule is that when you sell your home, the capital gain realised on the sale is exempt from capital gains tax. Based on the Income Tax Act, No 58 of 1962, you will pay no capital gains tax on the first R2,000,000 you make when you sell your home. There are, however, some restrictions on this exemption.

What’s in a name: 'primary residence' examined

By Danielle le Roux and Johan van der Walt The term ‘primary residence’ is defined in paragraph 44 of the Eighth Schedule to the Income Tax Act, No 58 of 1961 (ITA) (read with paragraph 1). The reason this definition has captured the minds of many is due to the exclusion on the gain or loss made on disposal of one’s primary residence, provided the gain does not exceed R2 million or the proceeds from the sale of the property do not exceed R2 million. To qualify as a primary residence, and receive the benefit of the exemption, a residence must be one in which a natural person or a special trust holds an interest. But, in addition, the natural person or a beneficiary of the special trust or spouse of the person or beneficiary must: ordinarily reside or have resided in the residence as his or her main residence; … Continue reading