I thought I would put together some answers to questions that are frequently asked by clients. Most of you would probably know the answers but for those of you that don’t? Here goes.........
Appointing the right person or company to help you deal with your currency requirements can be an extremely difficult thing to do. In these days of "get rich quick" mentality, choosing who to trust is becoming more and more difficult. If you choose the right broker, your deal could go quickly and smoothly, achieving the best exchange rate, service and figure you were looking for.
However, choosing the wrong company can lock you into a lengthy listing contract that may ultimately cost you a lot of money with very little benefit.
Yes, non-residents can pay foreign funds into South Africa for the purpose of acquiring property. The funds can be paid into any South African nominated bank account, preferably the conveyancer’s trust account. When funds are paid into a South Africa bank account, certain information must be provided to the bank before the funds can be released. Should the foreign funds be paid into the conveyancer’s trust account, the conveyancer will supply the required information to their bank. Once the funds are released the conveyancer will receive a deal receipt, which is the record of the introduction of foreign funds. This deal receipt must be kept by the purchaser for future repatriation of the funds.
Yes, non-residents can borrow money locally for the purchaser of property but the amount that they will be able to borrow is restricted. Non-residents can borrow funds equal to the amount of foreign funds that they introduced into South Africa. Non-residents must supply the documents prescribed by the Financial Intelligence Centre Act, in order to qualify for a South African mortgage bond.
Yes, non-residents can open a local bank account but they will only be able to open a non-resident bank account. Most of the retail banks will be able to assist a non-resident with opening an account. A non-resident account however has restrictions on the funds that can be deposited into the account.
Yes, conveyancer’s documents may be signed overseas and the procedure that must be followed will vary, depending on the place where it is signed. When documents are signed in the United Kingdom, Zimbabwe, Lesotho, Botswana or Swaziland it must be signed in front of a Notary Public, who must then affix his/her official seal or stamp.
When the documents are signed in a country other than the abovementioned the documents must be signed in front of a Notary Public who must affix his/her official seal or stamp. The Notary Public must then have his/her signature authenticated and an apostille must be annexed to the documents. Alternatively the documents can be signed at a South African embassy and the embassy official will need to affix his official seal or stamp.
Yes, non-residents are allowed to repatriate any funds that they introduced into South Africa. Non-residents may therefore repatriate their sale proceeds provided that they can supply all the required documentation in order to obtain reserve bank clearance.
Yes, any person selling immovable property in South Africa is required to declare any capital gain made on the sale to SARS in order to be taxed accordingly. For a non-resident the procedure to be followed with regards to Capital Gain Tax (CGT) varies depending on the gross selling price of the property. When a non-resident sells the property for less than R2,000,000.00 he will be required to declare the capital gain made thereon at the end of the financial year wherein the property was sold.
If the property is sold for more than R2,000,000.00 the withholding provision becomes applicable. In terms of the withholding provision 5% of the gross selling price must be withheld and paid over to SARS, if the seller of the property is a natural person. The non-resident is however able to apply for a tax directive in terms of which the actual CGT obligation is paid over to SARS and not the entire withholding amount.
The capital gain made on the property is calculated by deducting the base cost from the selling price. The base cost include all the direct cost associated with the purchase of the property.
33.3% of the capital gain will be included in a natural non-resident seller’s annual taxable income and be taxed according the applicable tax bracket. If the non-resident seller is a company or close corporation 66.6% of the capital gain will be included in the taxable income and taxed at a rate of 28%. For non-resident trusts 66.6% of the capital gain will be included in the taxable income and taxed at a rate of 41%.
Yes, estate duty of 20% will be payable in the event of the non-resident owner’s death. Non-residents will only pay estate duty on their South African estate. They will be entitled to a rebate of R3,500,000.00 but this rebate will only be applicable to assets situated in South Africa.
By: Willem (Randtransfers)