When does it make sense?
Buying immovable property through a juristic person — a trust, close corporation, or company — used to be driven by tax arbitrage. Up to February 2011, juristic persons paid transfer duty at a flat 8%, which produced a saving on high-value acquisitions. That window is closed. Today the commercial reasons for a non-natural-person acquisition are:
- Estate planning. A property placed in a family trust during the founder’s lifetime falls outside the founder’s deceased estate, eliminating estate duty (currently 20%, with a R3,500,000 abatement) and executor’s fees (3.5% + VAT) on that asset. For high-net-worth families the saving can be material.
- Asset protection. A property owned by a trust is ring-fenced from the founder’s personal creditors — subject to the “alter ego”/sham-trust jurisprudence discussed below.
- Business integration. Where a property is used by a trading business, holding it in a company (often a separate property holding subsidiary) ring-fences the asset from the trading risk.
- Succession. A trust allows the founder to designate beneficiaries and distributional powers that would be harder to replicate through a will and deceased estate.
None of these rationales is about transfer duty. Plenty of buyers still approach a transfer under the impression that a trust or company will save them duty. It will not — and in marginal cases the ongoing compliance costs (see below) can outweigh the non-tax benefits. The decision is always commercial, and should be made with input from a tax adviser and an estate-planning specialist, not from an estate agent.
Transfer duty: same table as individuals since 23 February 2011
Before 23 February 2011, juristic persons paid transfer duty at a flat 8% regardless of property value. Under the Taxation Laws Amendment Act of 2011, that regime was abolished and the unified sliding scale now applies to every acquirer:
| Property value | Rate of duty |
|---|---|
| R0 – R1,210,000 | 0% |
| R1,210,001 – R1,663,800 | 3% above R1,210,000 |
| R1,663,801 – R2,329,300 | R13,614 + 6% |
| R2,329,301 – R2,994,800 | R53,544 + 8% |
| R2,994,801 – R13,310,000 | R106,784 + 11% |
| Above R13,310,000 | R1,241,456 + 13% |
A trust paying R2,000,000 for a house pays R35,634 in transfer duty — identical to a natural person. Since the unified scale includes the R1,210,000 zero-rated bracket, a juristic person acquiring a sub-threshold property pays no transfer duty at all, a benefit that was unavailable under the old 8% flat regime. For detail see our transfer duty guide.
The residential property company trap (s 1(1) TDA)
Before the unification of the rate table, a common structure was: form a company, buy the house into the company, then sell the shares in the company rather than the house itself — avoiding the transfer into the buyer’s name and the associated transfer duty. The Transfer Duty Act was amended to close this loophole, and the anti-avoidance provision is still in force and still a live trap.
Under section 1(1) of the Transfer Duty Act 40 of 1949, a residential property company is a company (or CC) more than 50% of whose aggregate fair value is made up of residential property (excluding financial instruments and Krugerrands or coins made mainly of gold or platinum). The acquisition of shares or a member’s interest in such a company is deemed to be an acquisition of the underlying residential property itself — and transfer duty is levied on the fair value of that property, not on the price paid for the shares. Under paragraph (b) of the “fair value” definition, loans and leases are disregarded when calculating fair value — so you cannot suppress the value by encumbering the property with matching liabilities.
Sections 3(1A) and 3(1B) go further and make the public officer of the company and the seller of the shares jointly and severally liable for the unpaid duty. Simply telling the buyer to sort out the SARS side does not offload the seller’s risk. REITs listed on the JSE are carved out of this rule from 11 December 2013 — trades in REIT shares are not caught by the residential-property-company net.
Trusts and the s 1(1) contingent-rights rule
The same anti-avoidance architecture extends to discretionary trusts. Paragraph (f) of the “property” definition in section 1(1) of the Transfer Duty Act catches the acquisition of a contingent right to property held by a discretionary trust where:
- the acquisition is accompanied by a substitution or variation of the trust’s loan creditors or beneficiaries, or a change of trustees; and
- the trust holds residential property as more than 50% of its asset value (mirroring the residential-property-company test).
Where those conditions are met, SARS treats the transaction as an acquisition of the underlying property and assesses transfer duty on its fair value. The SARS TD01 Transfer Duty Guide discusses the rule at paragraph 2.7. The upshot: you cannot use a trust-takeover structure to substitute for a property purchase without triggering duty.
The trap commonly catches buyers who inherit (or purchase) a residence-holding trust from a family member, restructure the trust by changing trustees and loan accounts, and assume the transaction is tax-neutral. It is not — a transfer duty return is required and duty is payable on the fair value of the underlying property. Take SARS-specific tax advice before accepting a trust “takeover” in lieu of a direct purchase.
Ongoing costs
Where the commercial rationale for a juristic-person purchase stands up (estate planning, asset protection, business integration), the ongoing administrative costs need to be factored in. A rough annual bill for holding a single residential property in a trust or company:
| Cost | Trust | Company |
|---|---|---|
| CIPC / Master’s fees | R0–R250 | R100–R450 |
| Trustee / director fees | R3,000–R10,000 (prof. trustee) | Nominal (unless external) |
| Accounting / financial statements | R3,000–R8,000 | R5,000–R15,000 |
| Audit (if required) | Usually not required | R15,000–R50,000 |
| Separate tax return | R2,000–R6,000 | R2,500–R7,500 |
| Indicative total p.a. | R8,000–R24,000 | R7,500–R22,000 (non-audit) or R22,500–R72,000 (audit) |
Add to this the section 7C implications on any interest-free or low-interest loan a natural person makes to a trust (see the FAQ below). The SARS official rate as at 22 April 2026 is 7.75%; a R3,000,000 interest-free loan to a trust produces a deemed donation of R232,500 per year and donations tax of approximately R16,500 per year after the R150,000 annual exemption. The Taxation Laws Amendment Act 42 of 2024 tightened s 7C for cross-border loans from 2025.
Asset protection — what’s real and what’s not
A properly-constituted trust provides genuine asset protection. A property owned by a trust is not owned by the founder or beneficiaries; it belongs to the trust as a separate legal entity, and a personal creditor of the founder cannot ordinarily reach it. In a liquidation or insolvency, the trust property is untouched by the founder’s personal collapse.
The caveat is alter ego / sham trust jurisprudence. SA courts have, in a string of cases starting with Land and Agricultural Bank of South Africa v Parker 2005 (2) SA 77 (SCA) and developed in Van Zyl v Kaye NO 2014 (4) SA 452 (WCC), been willing to “pierce the trust veil” where the founder treated the trust as their personal account — making unilateral decisions without the other trustees, banking trust funds in their personal account, using trust property as personal collateral. Where the trust is an extension of the founder’s personal estate, the court can treat the trust assets as the founder’s own for enforcement purposes.
The protective architecture is simple: at least one independent trustee (not a family member or employee); every decision formally minuted as a resolution of the trustees; separate bank accounts for trust and personal funds; arm’s-length dealings for any rental, loan or use of trust property. Get these right from day one and the protection holds. Skip them and the structure unwinds in the first creditor action.
CGT inclusion rate: 80% for companies and other trusts vs 40% for natural persons
Where the transfer duty table is unified across all acquirers, the capital gains tax rules are not. The inclusion rate — the percentage of a capital gain that is added to taxable income — is much higher for juristic persons:
| Taxpayer | Inclusion rate | Max effective CGT | Primary residence exclusion? |
|---|---|---|---|
| Natural person | 40% | ~18% | Yes (R3m) |
| Special trust (disabled) | 40% | ~18% | Limited |
| Company | 80% | 21.6% | No |
| Other trust (discretionary) | 80% | 36% | No |
The impact surfaces at sale. A natural-person seller of a primary residence pays almost nothing in CGT up to a R3,050,000 gain (primary-residence plus annual exclusion) and at most about 18% of any further gain. A company or non-special trust gets no primary-residence exclusion, and pays 21.6% (company) or up to 36% (trust) on the full gain. On a R5,000,000 gain: a natural person might pay CGT of perhaps R360,000; a trust might pay closer to R1,800,000. Discretionary trusts can distribute gains to beneficiaries in the year of realisation and have the gain taxed in the beneficiary’s hands (the “conduit principle”) — but s 25B(2) attribution rules have complex timing effects, and the planning needs to be done before the sale, not after.
Frequently asked questions
No — not since 23 February 2011. Before that date, juristic persons paid transfer duty at a flat rate of 8%, which was a disadvantage on low-value properties but an advantage on high-value ones. Since February 2011 the same sliding-scale table applies to natural persons, companies, close corporations and trusts alike. A trust buying a R3,000,000 house pays identical transfer duty to an individual buying the same house — R107,356 (approx). Worse, a trust or company buying a property below the R1,210,000 threshold used to pay 8% (so R96,000 on a R1,200,000 house); since unification, it pays zero, the same as an individual. The historical transfer-duty arbitrage is closed. If someone still claims a “transfer-duty saving” from buying through a trust, they are either misinformed or referring to some other angle (e.g. section 1(1) shares acquisition, which has its own trap — see below).
Ongoing annual costs for a trust typically run R5,000 to R20,000: trustee fees (R3,000–R10,000 for a professional trustee), accounting and financial statements (R3,000–R8,000), trust tax return, and the cost of any trustee meetings the deed requires. For a company holding the property, add CIPC annual returns (R100–R450), a separate company tax return, and — if the company meets the audit thresholds — an independent audit (R15,000–R50,000). On top, both structures add complexity at sale: trustee resolutions, public officer affidavits, and juristic-person FICA. A useful rule: if the property is a single residential house worth less than R5,000,000, a trust or company typically costs more to maintain than it saves.
A trust can ring-fence a property from the personal creditors of the founder or beneficiaries, which is the classic asset-protection rationale — and where the property is genuinely placed in trust, with independent trustees and properly minuted decisions, the protection works. The risk is the “alter ego” or “sham trust” challenge, where a creditor or tax authority argues that the founder retained such complete control over the trust property that the trust is a mere extension of the founder’s personal estate. In the leading case Van Zyl v Kaye NO 2014 (4) SA 452 (WCC) and the string of SCA judgments that followed, SA courts have been willing to “look through” a trust and treat its assets as part of the founder’s estate where the founder effectively dealt with the property as their own. Use independent trustees, minute every decision, don’t borrow from the trust interest-free, and take tax advice before moving an existing property into a trust.
Section 7C of the Income Tax Act is an anti-avoidance provision that deems a donation to have been made where a natural person makes an interest-free or low-interest loan to a trust (or a company owned by a trust). The “deemed donation” is the difference between the SARS official interest rate — 7.75% as at April 2026 — and the interest actually charged on the loan, for each year the loan runs. The deemed donation is subject to donations tax at 20% (or 25% above R30,000,000). In practical terms: if you lend R3,000,000 interest-free to a trust to buy a house, the deemed donation is R232,500 per year (R3m × 7.75%), less the R150,000 annual donations-tax exemption, producing R16,500 of donations tax every year. The Taxation Laws Amendment Act 42 of 2024 tightened s 7C further for cross-border loans effective 2025 onwards. Take tax advice before structuring any loan to a trust.