Recent changes in the taxes applied to trusts now make them an expensive vehicle in which to hold property.
She says it is important for those setting up trusts to be absolutely clear as to what their intentions are.
This is according to Lanice Steward, managing director of the Cape Peninsula estate agency, Anne Porter Knight Frank who says that since 1stMarch this year the capital gains tax on assets sold by a trust have been raised from 50 to 66.6% of the gain – and this gain is then also taxed at the flat rate of 40% applicable to all trusts.
Steward says it is clear that the government has set its mind against trusts being used for property owning purposes. “However, it is worth noting that if the gain is distributed among the beneficiaries they will be taxed at the lower rates applied to individual taxpayers.”
She says it is important for those setting up trusts to be absolutely clear as to what their intentions are.
“Trusts can still be a good way to protect the assets of a minor before he or she is in a position to inherit, but in general lower individual taxes make it preferable now to hold the property in an individual’s name.”
Also read CGT on property transactions explained and When to pay capital gains tax.
