Page 46 - Nexia SAB&T Property & Tax Guide 2022

◆ Capital gains tax is levied in a deceased estate at the same rate as for individuals.
◆ The deceased estate will be entitled to the same exemptions and exclusions as
would have been available to the deceased before his death (the annual exclusion of
R40 000), however it will not be entitled to any assessed capital loss that might have
remained in the estate of the deceased, or to the R300 000 annual exclusion, nor to
the primary residence exclusion of R2 million. Deceased estates are not provisional
taxpayers.
TRANSFER OF IMMOVABLE PROPERTY TO THE HEIRS/LEGATEES AND CGT
◆ In this case, the calculation for CGT will reflect the proceeds as equal to the market
value of the property at date of death of the deceased, less the base cost equal to
the market value of the property at date of death, resulting in a tax-neutral transfer of
assets from the deceased estate to heirs or legatees.
◆ Under most circumstances, although capital gains tax may be paid at the death of the
deceased (in terms of the deceased person’s final income tax return, as described
above), no further capital gains tax will be payable when an heir or legatee receives the
property from the deceased estate.
◆ Capital gains tax will only arise again when the heir disposes of the property at a later
stage, where the calculation will reflect the proceeds as equal to the selling price of
the property, and the base cost equal to the market value of the property at the date of
death of the deceased.
TRANSFER OF IMMOVABLE PROPERTY TO THE SURVIVING SPOUSE AND CGT
◆ All assets that pass to a surviving spouse (either by way of a Last Will and Testament,
or by intestate succession, or by way of a redistribution agreement between the heirs/
legatees) are subject to “roll over” CGT relief.
◆ This means that capital gains tax is postponed until the surviving spouse disposes of
the assets during his or her lifetime or at death- the capital gain is then determined
from the date of acquisition by the first dying spouse and the base cost at such
disposal is the base cost as incurred by the first dying spouse.
◆ The implication is that the original base cost is rolled over to the surviving spouse, and
when he or she finally disposes of the property, capital gains tax will be levied on the
difference between the proceeds and the original base cost.

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