Page 45 - Nexia SAB&T Property & Tax Guide 2022

◆ The deceased estate would carry the costs of obtaining rates and levy clearance
certificates valid until after registration, and of cancelling any bonds registered over the
property.
◆ Where the Executor sells the immovable property during the administration of the
estate to a third-party purchaser, the value of such property may increase or decrease
between the date of death and the date of sale, which may have capital gains tax
implications for the estate.
◆ These CGT implications are discussed in more detail below.
CAPITAL GAINS TAX, DEATH AND IMMOVABLE PROPERTY
THE DECEASED PERSON
◆ At death, the deceased person is deemed to have disposed of all his assets, including
immovable property, to his estate, at an amount received or accrued equal to the
market value at the time of death. Capital gains tax is activated through this deemed
disposal.
◆ The R300,000 annual exclusion granted in the year of death of the individual will apply
to these disposals made to the deceased estate.
◆ The exclusion for primary residence may apply (R2 million).
◆ The CGT inclusion rate of 40% applies to the deceased person, and this amount will
attract tax at the deceased’s marginal rate of income tax.
◆ An exclusion to this provision is provided in Section 9HA(2) read with Section 25(4)
of the Income Tax Act (58 of 1962), which provides that where assets (including
immovable property) are disposed of to a surviving spouse (by means of either
intestate or testate succession, or by way of a redistribution agreement between
the heirs or legatees), the liability for capital gains tax for the deceased person is
postponed until the death of the surviving spouse or until such time as the surviving
spouse disposes of it him or herself. This is known as “roll over relief” and is similar to
the exemption in Section 4q of the Estate Duty Act, where the estate duty liability in
respect of assets inherited by a surviving spouse is postponed.
SALE OF IMMOVABLE PROPERTY BY THE EXECUTOR AND CGT
◆ Where the Executor sells the immovable property during the administration of the
estate to a third-party purchaser, the value of such property may increase or decrease
between the date of death of the deceased and the date of sale of the property, which
may have a capital gains tax implication for the estate.
◆ The proceeds would equal the selling price of the property, less the base cost equal to
the market value of the property at date of death, which will result in either a capital
gain or loss.
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