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Trusts and Estate Planning

There are direct costs and there are opportunity costs.

Let’s look at the direct costs first.

Capital Gains Tax

Because you are a connected person in relation to the trust, the sale (you would not want to make it a donation) will be deemed to be at market value and CGT will apply at up to 18% of the increase in value over the base cost (purchase price plus cost of improvements) as if you had sold the house to a third party.

But don’t despair! Because this is your primary residence, you are allowed to make a capital gain of R2m before CGT kicks in.

Transfer Duty

Again, the transfer duty will apply to the market value, regardless of the sale price. Transfer duty starts at zero, then climbs to a maximum of 13% according to the scale below.


Conveyancer’s fees

These will depend upon the conveyancer and the value of the property. We recommend KG Tserkezis Inc. Speak to Dino and tell him that Derek referred you.

Interest and Donations Tax

You’ll have to lend the trust, or its company, the money to buy the house from you. Normally, SARS requires that you charge interest on the loan at a minimum of the official rate (which is published by SARS and is currently 5,25%). Any shortfall on the interest is deemed to be a donation each year and is therefore subject to Donations Tax at 20%. However, if the loan is in respect of your primary residence, this requirement falls away.

Bond renegotiation costs

If your house is bonded, you’ll have to renegotiate the bond with the bank and they normally charge a fee.

Now for the opportunity cost.

R2m allowance before CGT

If your primary residence is registered in your name(s), then upon selling it, you are allowed to make a capital gain of up to R2m before CGT kicks in. This would not be the case if the property is owned by a company or a trust.



  1. Hi Derek,

    My mom finished paying off her house primary residence. I want to start a property portfolio and have that under a trust, and want to include our family house. Property value and CGT <R1mil. I want to understand how the sale and lending money to the trust works. Can i just do a sale to the trust through a loan (and the interest requirement falls away) without providing any upfront liquidity to the trust?

    Thanks in advance

    1. Answering just that one question leads you into very uncertain territory. However, the answer is that if she sells the house on loan, then, because it is the seller’s primary residence, s7C interest does not apply.
      Now, if you plan to build a property portfolio, you need far more guidance than that. I can suggest two things.
      1) Read my book “16 Steps to Wealth” which you will find at and
      2) Make a Zoom or Google Meet appointment with me for a 2 hour discussion. There’s never a charge for meetings. You’ll find my diary here

  2. Ronel du Toit

    I have a townhouse in Bronkhorstspruit. Primary residence.
    Am involved in acompany of my 2nd husband, me as sole director, he was sequestrated some 8 years ago, but his kids rule the company now and I am only there to sign.
    My townhouse is mine from first marriage and I need to procure it for my children, and put in a trust, should the company have liabilities. I need to resign asap for my own good.
    Need assistance pse

    1. Hi Ronel,
      As the sole director of the company you are in control, so you must not resign until you have sorted this out. It is not clear how the company acquired the townhouse from you, but it should still owe you the money for it. As the company director there is no reason why you should not sell the townhouse to a trust in repayment of the debt to you. The trust will then owe you the money. However, if the townhouse is rented out, then you should form a company that is owned by the trust and sell the townhouse to the company. This is off the shoulder advice, because you have not given me all the facts. Best would be to book an online meeting with me via

    2. Hi Ronel, On re-reading your comment, I see that the townhouse is your primary residence, so you don’t need it to be owned by a company. It can be owned by a trust directly.

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