Ensure that you obtain professional advice when buying a home

BY GRAEME LUND - MARCH 17, 2015

The 2015 Budget Speech was not favourable to people who are in the market for an executive home. The increase in transfer duties for the top end of the home owner market will add to the already onerous list of costs involved in purchasing and executive home.

Adri Ludorf from Goldberg & de Villiers Inc. says, “It cannot be strongly enough emphasised that anyone planning to buy property must take expert, independent legal advice.”

“To make an informed property purchasing decision that will ensure that you acquire not just a home but a sound long-term investment, you should also obtain legal and tax advice about the appropriate legal entity in which you should register your property.”

The legal and taxation landscape constantly changes and can result in unintended consequences for the unwary. Each year, new legislation is passed, tax rates change and new bylaws made and even an experienced property buyer may find themselves burdened with an unforeseen problem if they do not obtain professional advice.

Trusts

Trusts have been popular with executive home owners for many years and have been an integral part of their financial and estate planning.

However, the cost of owning assets in trust has in aggregate become more expensive in terms of capital gains taxes, income taxes and fewer income tax reduction opportunities. In addition, the cost of administering a trust has also increased as it is imperative that independent trustees are included.

“In our opinion Trusts still have a very important role to play in estate planning and in certain circumstances we would recommend that you place your home in a Trust. However, the legal and taxation landscape constantly changes, resulting in unintended consequences for the unwary,” says Ludorf.

“We recommend that property owners ensure that the Trust deed is drafted by a specialist, with their specific requirements and circumstances in mind.

“In addition, they need to ensure that they are advised in relation to the ongoing management and taxation of the Trust. We frequently see clients who have set up Trusts and never transferred assets to them, or whose deeds are defective, or who do not benefit from the tax advantages, simply because they don’t know how.”

With professional advice and careful management, a trust can, in certain circumstances, still remain an effective tool for estate planning.

For more information visit www.goldbergdevilliers.co.za