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Tag Archives: Real estate

Real Estate Investor Magazine / Rode Property Conference

As you know Meyer de Waal will be a special guest at the upcoming Real Estate Investor Magazine / Rode Property Conference to be held in Johannesburg in 19 August and Cape Town on 26 August 2015.

We have secured “5 specials” deals and if you book 3 tickets, you can get 2 for free.

» Contact Ray at our office to secure your special booking.

A snippet of what is to come:
Here are the links below to our interview on ‘Ask the Property Experts’ property broadcast on Business Day TV recently as a snippet of what is to come.

Ask the
Property Experts
Looking at where South Africa is on the property clock, Kura Chihota talks to CEO of Rode and Associate, Erwin Rode and specialist property publication founder and Editor in Chief of the Real Estate Investor magazine, Neale Petersen.    view Part 1 »
   view Part 2 »

REAL ESTATE CONFERENCE: Thought Leaders in Real Estate Investment and Education
The annual Rode-REIM Real Estate Conference will again be jointly hosted by Rode and REIM this year and will take place in August in Durban, Johannesburg, Bloemfontein, Port Elizabeth, Cape Town and Windhoek. Whether you are a beginner or seasoned market participant, Rode and REIM bring together the latest world and SA trends, education and thought leadership on real estate and investment. The events are sponsored by Wealth Migrate.

Rode-REIM Real Estate Conference Events 2015

  1. Durban – Half-day Conference – Gateway Hotel – 18 August – Click here for Bookings
  2. Johannesburg – Full-day Conference – Emperors Palace – 19 August – Click here for Bookings
  3. Bloemfontein– Half-day Conference – Ilanga Estate – 21 August – Click here for Bookings
  4. Port Elizabeth– Half-day Conference – Radisson Blu Hotel – 25 August – Click here for Bookings
  5. Cape Town– Full-day Conference – Spier Wine Estate – 26 August – Click here for Bookings
  6. Windhoek– Half-day Conference – Hilton Hotel – 28 August – Click here for Bookings
 

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BUYING YOUR PROPERTY IN A TRUST: IS IT REALLY WORTH IT?

To buy or not to buy, that is the question.

A trust is a legal entity with its own distinct identity. It has the contractual capacity to acquire, hold and dispose of property and other such assets for the benefit of its nominated beneficiaries. All trusts are governed and administered in terms of the Trust Property Control Act, and formed and governed in terms of a trust deed, a written agreement concluded between the trustees and the founder of the trust.

Perhaps the most significant purpose for establishing a trust is the separation of ownership, which is often desired for reasons including asset protection, risk mitigation and limiting ones tax liability. In order for the trust to transact, a trustee(s) are duly appointed in the trust deed who are thereby authorised to act on behalf of the trust. A trustee may act on behalf of a trust provided that he has been duly appointed to act in this capacity in the trust deed, that the trust has been registered with the Master of the High Court and the Master has authorised such appointment in writing by issuing Letters of Authority to this extent. Further, the trustees’ powers to transact are set out in and may be limited by the trust deed.

There are various advantages related to purchasing property in a trust as opposed to buying it in your personal capacity of which the following are the most prominent:

A trust is a flexible vehicle, capable of catering for various changes and uncertainties occurring in one’s life over time e.g. a larger family, death, insolvency, legislative and financial changes and other circumstances.

Since the property is not registered in your name, the value of your personal estate upon death is reduced. The direct implication hereof is a reduction in your estate duty exposure. Also, should the asset value have increased over time, this growth will be excluded from your estate and the capital gains tax (“CGT”) payable on your estate is reduced accordingly. Executor’s fees pertaining to these assets will also be eliminated.

Provided that you do not establish your trust(s) with the intention of prejudicing creditors, purchasing or transferring a property into a trust helps to protect the specific asset from creditors.

It is advisable to create and operate a trust with appropriate tax advice. In this way a trust will enable you to mitigate your tax liability with specific reference to income tax, CGT, estate duty, donations tax and transfer duty.

Trusts are excellent succession planning tools as a property bought in a trust can remain in the trust indefinitely. Consequently, there is no need to transfer the property from the deceased into the name of his heir. In turn this saves on unnecessary transfer costs and CGT duty.

When finance is required to purchase a property in the current “market” the banks are less likely to grant a 100% bond to a trust and demand a deposit of up to 20% when a trust acquires a property. It appears in some instances individuals may receive up to 100% property finance.

Looking at the downside, the following count under the most burdensome disadvantages of purchasing property in a trust .

All trusts are taxed at an income tax rate of 40%. Consequently, it seems to be more favourable to buy a property in your individual capacity rather than in a trust. Here is why: CGT on the growth of the value of the property comes into play once a property is sold.

Trusts are subject to the highest inclusion rate. 66.66% of the net gain must be included in the trust’s taxable income for the year in which the property is sold. Consequently trusts are taxed at an effective rate of 26.6%. This is compared to individuals who are subject to an inclusion rate of 33.33% and a maximum effective rate of only 13.33%. However, if the profit or gains are distributed to the beneficiaries of the trust during the same tax year, the tax payable may end up being the same amount, as if a natural person is disposing of a second property.

Another downside of the trust owning the property is that the founder does not enjoy control over that property as the trust will be the legal owner of the property and the trustees will have the power to administer same.

Therefore based on the above, if administered correctly, one can benefit tremendously from the exercise of purchasing a property in a trust. It is, however, crucial to determine whether the addition of a trust to your portfolio is necessary and beneficial based on your individual needs and circumstances.

 
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Posted by on 08/03/2012 in Content

 

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BOUNDARY (PARTY) WALLS: THE NEIGHBOURLY THING TO DO

The rights & obligations of both owners

The easiest way to determine the boundaries between properties is to consult the official town planning diagrams kept by the local authority in control of the area (Rondebosch). In the event of a dispute over the dividing line between two properties, the first point of reference would be the official property plans (diagrams). One can refer to the title deeds of the properties concerned to ascertain plan numbers and with which deeds the plans are filed.

In the absence of proof that a boundary wall or fence is entirely on one of two adjoining properties, it is presumed to half on one property and half on the other. Some legal authorities state that each part is separately owned by the owner of the property on which it stands, but that there are reciprocal servitudes of support. Other authorities state that the wall is jointly owned by the owners of the adjoining properties.

It is important to take note that the law relating to such encroaching boundary walls reflects the influence of both trains of thought and does not concretely swing in either direction. An owner who transfers his property automatically transfers his joint ownership.

Neither owner may without the consent of the other remove, raise or lower the boundary wall or tamper with it in any way except in an emergency, although in terms of common law a neighbour is allowed to break down a wooden fence and replace it at own cost with a more expensive partition.

Either owner my re-erect a boundary wall destroyed by an act of God, such as fire or flood; the other owner would have to contribute half the cost – if he or she will derive any benefit from it. Each owner is obliged to contribute to the maintenance and repair of the wall, although an owner can refuse to contribute to the cost of an unreasonably expensive new wall. Also, an owner is under no obligation to replace with a similar structure a boundary wall that was unreasonably expensive when it was originally erected.

Although both parties are entitled to reasonable use of the boundary wall, this right does not include reducing its strength or making it unstable but does however include improving and altering the appearance of the side that fronts your property. Subject to local authority regulations, either owner my use his side of the boundary wall as support or a beam or for water pipes and may even build on it if it is strong enough.

Title deeds might determine who is responsible for repairing shared walls or fences. A servitude could also make a single owner entirely liable for the costs of upkeep. If one neighbour refuses to make essential repairs, anyone who is entitled to enforce the servitude may obtain an estimate of the costs of repairs, though it is unlikely that a contractor will undertake to handle the repairs if the person responsible for payment refuses to do so.

The owner of a wall who is not bound by a servitude is usually under no obligation to carry out repairs. However, in the case of deterioration that is likely to prove dangerous to the public, a local authority might order the owner(s) of the property to carry out repairs. Should no servitude exist, repairs must be carried out by agreement between the two owners.

PRACTICAL APPLICATION

In both the High Court judgments of Van Bergen v Van Niekerk & Another and Passano v Leissler, the court reiterated the same stance in accordance with the principles laid down in Voet’s Commentarius ad Pandectas.

The respective courts held that in case of doubt, a wall intermediate between two adjoining properties is presumed to have been built on the common boundary. Such a party wall belongs to both the owners of the adjoining properties, irrespective of who built it. Although this is not co-ownership in the accepted sense of the term, the owners of neighbouring properties do have rights against each other.
One view which was taken was that the owners have the rights of co-owners in the sense that each is entitled to the maintenance of the wall encroaching on his neighbours property, as well as the part standing on his own property. Another view is that while each owner has no right of ownership in the portion of the wall standing on his neighbour’s ground, each owner is entitled to demand that the other co-owner should keep his half of the wall in a proper state of repair.

The courts seemed to favour the view that each owner owns half of the wall on his side of the median line with reciprocal servitudes of lateral support. Accordingly both neighbours are liable for the cost of the maintenance of the wall and both must refrain from doing anything which my detrimentally affect the stability of the wall.

 
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Posted by on 15/02/2012 in Content

 

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