IS TRANSFER DUTY ALWAYS CALCULATED ON THE PURCHASE PRICE? In terms of the Act, transfer duty is payable upon the fair market value of a property as at the date of acquisition thereof. Conveyancers calculate and pay transfer duty on the purchase price of the property, as this is usually a fair reflection of the market value of the property as at the date of acquisition, this is generally accepted by SARS. However in some instances SARS has queried this and raised the transfer duty on the municipal valuation of the property where such value exceeded the purchase price. The municipal valuation is unfortunately not an accurate barometer of a fair market value, and the municipal valuation may have been concluded at a time when the market value of the property was higher. The comissioner has issued a circular, to confirm that they will accept the price of a property as the fair market value for purposes of calculating transfer duty, but will scrutinize transactions where the purchaser and seller are related, and the price appears to be favourable, or with respect to forced sales, where properties are sold at "knock down" prices. Alternative valuations from other Estate Agents may motivate SARS to accept the selling price.
Posted on: Mon, 30 Sep 2013 11:45:02 +0000
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