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Is your Holiday Home owned by a Company, CC or Trust?



The Taxation Laws Amendment Act was promulgated on 10 January 2012.  It contains significant changes which will have an impact on all disposals of property in terms of the Eighth Schedule to the Income Tax Act, after 1 October 2010.

Paragraph 51A applies retrospectively as from 1 October 2010.  The main points are as follows:

  1. the "disposal" must take place between 1 October 2010 and 31 December 2012.
  2. the property may be "disposed" of to: i) 'natural persons' who are 'connected persons' as defined in the Income Tax Act; and ii) which residence has been "mainly used for domestic purposes since 11 February 2009 until date of disposal".
  3. Within 6 months from the date of the disposal, steps must be taken by the company/cc/trust to liquidate/wind up/deregister or revoke the entity.
  4. Disposal is deemed to be at the base cost.

The major change in terms of the amendment is that the requirement whereby the natural person must have ordinarily resided in that residence has been removed.

In our opinion, owners of holiday homes can now take advantage of the exemption.

Should you have any queries regarding the above, alternatively should you require a complete explanation of the requirements, please do not hesitate to contact our offices.