Support Solutions for Serious Investors
There is more to property investment than buying the right property at the right time. Not considering tax and risk could be even worse than purchasing a property at a high price! Our investment services include:
- Advice on Tax Efficient Structures
- Setting up Property Trusts
- Setting up Property Investment Companies
- Advice on Risk Management
- Advice on Gearing
- Transfer of Properties
- Transfer of Shares
As each investor has unique needs, apprehensions and circumstances, we would gladly meet with you for a free introductory consultation. This would give us an opportunity to understand your needs better and introduce you to our services. Read the content below for more information on these services. Visit also Expert Advice for more interesting articles on property matters.
Investment Support Services
Tax Efficient Structures
Your intention when purchasing a property will largely influence the choice of vehicle required. The tax implications of a buy-to-let property will differ from a restore-and-flip deal. Also, properly grouping correct properties could allow you to register for VAT and claim back transfer duties and VAT paid. Some projects may be viable to run through a trading trust, making use of some of the tax benefits available to you.
Trust have the benefit of preserving wealth even after the passing of the founder. It is however important to only use a trust in property if you understand the tax implications, and know how to navigate them. On some transactions it may even be the most tax efficient vehicle to use, with income tax levied at 40% and capital gains tax inclusions of 50%, you must however be certain that you follow the correct process and under the correct circumstances.
Property Investment Companies
When your property portfolio also contains commercial properties and it may be necessary to unbundle some of the investments from time to time, it may be advisable to run the project through a company. This allows you to deal with the shares of the company and raise finance through the issue of debentures or further share capital. Having the company registered as a VAT vendor may also allow for refunds on Transfer Duty or VAT paid by you.
It is however important to know that your Property Investment Company is regulated by the Companies Act, and under the 2008 Companies Act, the directors of companies have numerous obligations and duties to comply with. Advice in this regard is important.
Don’t put all your eggs in one basket! Never has a saying rang more true. It is crucial to structure your property portfolio in such a way that you hedge against the various risks inherrent in property investment. Each invetment cluster must be properly ring-fenced to ensure that trouble in one area does not bring down the entire empire. Risks that need to be mitigated range from non-paying tenants, rise in interest rates, damage to properties through nature or person and the sudden drop in market activity.
Gearing is the process of supplementing you own money with borrowed money (typically from a bank) to acquire assets. The Loan-to-Value ratio (LTV) is the ratio between the value of the property and the amount borrowed against the property. Gearing is an effective way to grow your property portfolio much faster, but you must caution against sudden hikes in interest rates or reduced market activity.
For more information on these and other topics give us a call or just complete and submit the simple contact form. We would like to set up a free introductory meeting with you.
The effect of a sale on a management mandate agreement Is the purchaser of a property with a tenant in the premises duty-bound to perform in terms of the former landlord’s obligations towards the lease agreement, or in terms of a mandate in the case of a management mandate agreement? The lease agreement remains in […]
Obtaining court dates from the High Courts in Lockdown Level 1 As much as we, as legal practitioners, have got used to attending to court virtually and working with the new online court system, called CaseLines; the legal profession is still experiencing extreme difficulties. The latest court directives allow us to issue new proceedings at […]
Does Section 4(5)(c) of the Rental Housing Act contradict the principle of huur gaat voor koop? The legal principle of huur gaat voor koop was established within Roman Dutch Law and has, since the adoption of Roman Dutch Law as the foundation of the South African legal system, been one of the cornerstone principles governing property […]
Why were these regulations declared unconstitutional by the High Court? What does this mean? On 2 June 2020 the High Court handed down a judgement in the matter of De Beer v COTGA. News of this judgement spread in the media and on social media like wildfire, with headings like “Lockdown Regulations Unconstitutional”; as much […]
LEVEL 4 REGULATIONS ON EVICTIONS The Alert Level 4 Regulations were released to the public explaining exactly what Level 4 will entail for the South African public. One of the regulations, specifically Regulation 19, deals with the prohibition of evictions and has a big effect on our property industry. The Regulation reads as follows: A […]
No regulations of any kind have been implemented to authorise tenants to refrain from paying rent. The global pandemic brought about by the COVID-19 virus has thrust South Africa into one of the most unfamiliar and uncertain times in our history, the likes of which never before experienced. Government has, in response to the virus, […]