2 Do I need to open a South African bank account to transfer the money?
3 which are the cost Ill have tax etc..
Thanks for your help
There is no restriction in principle against non-residents owning property in South Africa.
Property may be purchased by a person in his/her individual capacity or in the name of a South African legal entity like a company or trust. Another option is to use an entity unique to South Africa: a close corporation or CC. This vehicle is ideal for small businesses and can also be used as a property-owning entity. The CC owns the property and the CC’s member/s own the member’s interest in the CC. It is also possible for foreign entities to own property in South Africa, although
there are certain formal legal requirements which must be complied first.
The tax consequences of buying, owning and disposing of fixed property in South Africa are determined not by a person’s nationality but his or her tax status. There are various ways of determining one’s tax status in order to establish whether you are a resident or non-resident for tax purposes. Both private individuals and legal entities are classified in South Africa as either residents or non-residents.
South Africa uses a source based system of taxation to tax non-residents. This means that any income earned by a non-resident person, which is South African in origin, is taxed in South Africa, unless that person hails from a country with whom South Africa has concluded a double taxation agreement. Therefore, even if you are not a resident of South Africa for tax purposes, you may be required to register for tax and annually submit an income tax return.
The South African Revenue Services (SARS) uses the purchase of property as a checkpoint to ensure that all parties to property transactions are registered for tax purposes and, if already registered, that their tax affairs are up to date. Therefore, should you not have been registered as a taxpayer in South Africa before, when you purchase immovable property, SARS will insist that you register at that point before it will allow the transaction to proceed.
There are several property taxes in South Africa. Among them are:
• Transfer Duty â€" This is a tax levied by government on the transfer of ownership of fixed property, and is payable before transfer of a property can take place. It is calculated on the purchase price of the property.
• Value Added Tax (VAT) â€" This is a tax levied on supplies of certain goods and services by persons or entities who are VAT-registered. It is charged at a rate of 14% and is included in the purchase price where the Seller (developer) is VAT registered. Most developers are VAT-registered and when VAT is applicable, no transfer duty is levied.
• Capital Gains Tax (CGT) â€" This tax is levied on the profit or gain made by the owner when property is sold. Non-residents are also liable to pay CGT and for this reason, SARS insists that all purchasers of property register as tax payers. When a non-resident person sells his property, a CGT withholding tax is applicable. This is collected by the attorney or estate agent dealing with the sale and paid directly to SARS. The non-resident seller is obliged to complete a tax return and account to SARS for the balance of the CGT within the same tax year.
After a sale is concluded, this process is managed by a specialised attorney referred to as a conveyancer, who is usually appointed by the Seller. The conveyancing attorney will draft the relevant transfer documents (and mortgage bond documents, if applicable) and present them to the purchaser for signature. Should it be necessary for the purchaser to sign legal documentation overseas, specific rules apply regarding the authentication of such documents before a
Notary Public, Embassy, Consulate or certain other higher authorities. It is advisable, if possible, to appoint someone in South Africa by way of a Power of Attorney to sign as many of the documents as possible on behalf of the foreigner. However, certain documents cannot be signed by anyone other than the purchaser himself. Should the purchaser be married according to the laws of a
foreign country, and he wishes to obtain bond finance, that person’s spouse will be required to co-sign the bond documentation. The purchaser will also be required to comply with the country’s Financial Intelligence Centre Act (FICA). This legislation, aimed at combating money laundering, requires that the attorney and the bank (if the purchaser takes mortgage finance), obtains and keeps on record certain documentary proof of identification, home address and the like. If the purchaser is a legal entity, the requirements are even more complex and detailed.
The legal fees payable to the conveyancer are usually paid over and above the purchase price of the property and are then payable by the purchaser prior to transfer. The transfer and bond costs are based on the purchase price and bond amount respectively and are typically 1-2% of those values.
In the case of Kelvin Manor, these costs are absorbed into the purchase price and will be paid by the Sel
There are no restrictions on land ownership by foreigners. You'll be treated the same as a SA buyer. Contact an estate agent for detailed information on procedures and requirements etc.
