Page 17 - Nexia SAB&T Property and Tax Guide 2024

restriction on the amount that could be borrowed locally in instances where an affected person wishes to
borrow locally to finance a foreign direct investment into South Africa (including the acquisition of commercial
property), or for domestic working capital requirements. Wholly non-resident owned subsidiaries may borrow
locally up to 100% of the total shareholders’ investment in respect of the acquisition of residential property
(and or other financial transactions) in South Africa.The effect of local participation in non-resident controlled
entities is to make the abovementioned norms more liberal the greater the local participation, i.e. the ability
to borrow locally increases. This is based on a formula.

DISPOSAL OF FIXED PROPERTY BY NON-RESIDENTS
Proceeds from the sale of assets, including immovable property by non-residents in South Africa may be remitted
abroad, with submission of proof (records) that foreign funds were brought into South Africa in order to purchase
the property. A non-resident who brings funds into South Africa in order to purchase property, and who obtains either
permanent or temporary residency in South Africa, may remit the proceeds of the sale of the property abroad (with
proof) asif he or she was a non-resident, within 5 years of becoming a permanent or temporary resident, however,
after 5 years has passed, will be treated as a South African resident for these purposes. Where there is a lack of
proof, a special application to the Reserve Bank can be made. Proceeds on the sale of assets, including immovable
property in South Africa by Emigrants will be subject to the blocked account provisions, and withholding tax.

DECEASED ESTATES AND IMMOVABLE PROPERTY

When a person, who owns immovable property registered in his name at the date of his death, passes away, a
number of scenarios may arise, as follows:

WHERE A PERSON DIES LEAVING A VALID LAST WILL AND TESTAMENT:
◆ A valid Last Will and Testament, in most cases, nominates an Executor to administer the estate (or a Master’s
Representative where the estate value is R250 000 or less).
◆ The immovable property will be transferred to the heir/s or beneficiaries as per the provisions of the Last Will
and Testament.
◆ If the property is subject to a mortgage bond, and where no mention is made of a bond on the property,
the Executor is required to settle the bond from the estate residue, and only then is he able to transfer the
property to the heirs or beneficiaries, simultaneously with the cancellation of the bond.
◆ To protect any beneficiaries or heirs who are minors (under 18 years old), a testator may wish to set up a
testamentary trust in his Last Will and Testament.
◆ Where agricultural property is bequeathed, the testator needs to be aware of Section 3 of the Subdivision of
Agricultural Land Act (70 of 1970), which prevents the subdivision of agricultural land, and such land being
registered in undivided shares in more than one person’s name. This is especially relevant when the testator is
considering bequeathing agricultural land to more than one beneficiary.
◆ If a testator bequeaths his immovable property to a number of heirs in equal shares (or otherwise), this
may give rise to impracticalities due to the indivisibility of the bequest, and may give rise to a redistribution
agreement being drawn up between the heirs.
◆ To save costs and time, to protect beneficiaries/heirs, and ensure that a person’s wishes are carried out, it is
imperative that he executes a valid Last Will and Testament.
NO VALID LAST WILL AND TESTAMENT (INTESTATE):
Where a person dies without leaving a valid Last Will and Testament:
◆ The estate is intestate, and the Master of the High Court will appoint an Executor or Master’s Representative
after receiving nominations from interested parties. A parent, surviving spouse or child of the testator may be
appointed without having to provide security for the proper performance of his duties. In all other cases, the
Executor will need to provide a bond of security to the Master – either issued by the Legal Practice Council or
a financial institution.
◆ The immovable property will be transferred to the heir/s or beneficiaries in terms of the Intestate Succession
Act (81 of 1987).

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