What is the process of transferring a house to a family member?

It may bring you some comfort and satisfaction to know that your child will be have the financial and psychological security that a home provides. As such, you can transfer a property to your child’s name in the form of a gift, instead of making it part of your inheritance.

Gifts (treated by SARS as donations) are taxed differently to inheritance. According to SARS; since 1 March 2018, “donations tax is levied at a rate of 20% on the aggregated value of property donated not exceeding R30 million, and at a rate of 25% on the value exceeding R30 million”.

The process is also different from that of bequething a property. It involves the following steps:

• Bond cancellation. If there is an outstanding bond on the property, it will need to  be settled, or cancelled. This requires the hiring of a bond cancellation attorney, who will charge a fee payable by the current home owner.
• Transfer of property. The process of transferring the property to the new owner incurs a transfer of property cost, payable to the conveyancing attorney.
• Transfer duty is payable on property transferred as a gift, though only if the property is worth more than R1 000 000.
• Bond registration. A bond attorney will need to register the bond under the name of the new owner, which incurs a bond registration fee.

So it’s similar to the process of purchasing a home, unless the bond is already paid, in which case only a fee for the transfer of property will be required.