The alternative vehicles through which a home can still be bought all have merits and demerits that have to be carefully weighed before a decision is made.

So says Lanice Steward, MD of Anne Porter Knight Frank (APKF), who adds that trusts, closed corporations (cc) or companies can still be the ideal way to purchase property. "Trusts as holding vehicles for property are still eminently suitable where the estate is large and/or requires protection from hasty or irresponsible action by one or more of the potential beneficiaries".

"Holding the property in a trust also gives the trustees the chance to peg the value of the property – which can have benefits in estate planning.

"The disadvantage of this type of holding vehicle, however, is that the transfer duty (at 10%) will be higher than that of the individual (8%). Capital gains tax (CGT) will also be payable at 50% of the capital gain. The income tax rate for a trust is 40%, which means they will pay 20% of the capital again as opposed to 14% if it is a company or cc."

Purchasing through a company or a cc, says Steward, used to have the great benefit that tax was paid on transfer of the shares, not on the property. This brought about a significant saving, but this tax ruling was changed and the transfer duty is now the same as for an individual.

However, if the company is VAT registered and the property is bought for development purposes, the owners can claim back the VAT payment.

The big disadvantage of a company as a holding vehicle, says Steward, is that its books have to be professionally audited by a qualified chartered accountant each year - even when there has been no business during that year - and this can be very expensive. This has been a chief reason for people taking advantage of SARS' window of opportunity to convert to individual ownership.

Another vehicle now frequently used by property investors and young couples or other new income earners anxious to get a foothold in property is partnership buying. "Here, two or more parties agree to buy property and, if they are wise, employ a lawyer to draw up a clearly worded agreement which establishes how they will determine the value should one of the partners wish to realise the asset."

When there is a disagreement on the value, says Steward, it can help to ask three estate agents to value the property and then to take an average price. "Alternatively, it may wise to employ a sworn valuator – but here again there is no guarantee that the other partners will accept the valuation. Before buying, think wisely about which vehicle would best suite your requirements."

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