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NO TRANSFER DUTY PAYABLE ON TRANSFERS OF PROPERTY ARISING FROM DIVORCE TO ONE OF THE DIVORCED SPOUSES

Monday, October 02, 2006
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NO TRANSFER DUTY PAYABLE ON TRANSFERS OF PROPERTY ARISING FROM DIVORCE TO ONE OF THE DIVORCED SPOUSES

Bobby Bertrand

Tucked away in the Small Business Tax Amnesty and Amendment of Taxation Laws Act No.9 of 2006 is clause 16 which removes the liability for payment of transfer duty on transfers of property arising from divorce between the divorced spouses. Previously the exemption only applied where the spouses had been married in community of property and as regards the acquirer’s existing half share in the property.Thus, if they had been married in community of property, and the wife acquired the former husbands share in the property, half of the value of the property was subject to transfer duty. If the whole property was worth R1.2 million, the former wife had to pay transfer duty on R600 000,00. In terms of the amendment, she would not have to pay any transfer duty now. However, if they had been married out of community of property and the former wife acquired a property worth R1.2 million from the former husband, she would have had to pay transfer duty on the full R1.2 million but now the transaction is exempt from transfer duty.

This exemption also applies to the dissolution of any customary union legally recognised or any union recognised as a marriage in accordance with the tenets of any religion.

The exemption has always applied to the acquisition of property by a surviving spouse from the estate of a deceased spouse. However it would seem that the exemption may now be restricted to property acquired by inheritance and no longer includes the acquisitoin by purchase from the deceased estate as the words "in any manner" have been deleted.

This new exemption applies to all divorces granted on or after 25 July 2006.