Types of ownership explained, what you need to know

Purchasing property is a good long term investment, we are often told, but what options are there for one to attain ownership?

Different types of ownerships:

  1. The most common types of ownership are freehold and sectional title for residential purposes. When purchasing property in this way there are legal and tax requirements to be satisfied in a form of transfer duty. According to Adrian Goslett, Regional Director and CEO of REMAX Southern Africa in an article published on the 27th of January 2018, when purchasing property as a natural person, transfer duty will be paid according to a sliding scale depending on the purchase price of the home. According to the 2017 Budget, homes priced from R0 to R900 000 are exempt from transfer fees, while properties priced between R900 001 and R1.25 million pay 3% on the value above R900 001. Homes priced between R1 250 001 and R1 750 000 will pay R10 500 plus 6% of the value exceeding R1.25 million etc.
  2. An individual could attain ownership as part of a private company (i.e. (PTY) Ltd). A private company that purchases immovable property will pay transfer duty at the same rate as a natural person. However, no transfer duty is payable by the seller if they are registered for VAT and the property forms part of the operations for which the seller is registered. But unlike our other options there are a lot more requirements that have to be complied with ito the Companies Act (Act).
  3. Ownership could further be attained through a Close Corporation (CC). While the introduction of the above Act phased out many CCs, existing ones could elect to continue to exist until deregistered, dissolved or converted into a private company governed under the new Companies Act. The difference between buying in a close corporation and a company, is that close corporations are governed by the Close Corporations Act 69/1984, they are managed by members, ownership is restricted to a maximum of 10 natural persons and the financial statements must be prepared by an accounting officer.
  4. The final option is to buy property through a Trust. A trust is established by a founder, trustees, and beneficiaries. The person that creates the trust is referred to as the founder or settlor. They will appoint trustees in terms of the Trust Deed who will manage the affairs of the trust for the benefit of the beneficiaries that are named in terms thereof. The one major benefit of this option is that property held within the trust is protected from being attached by the creditors of the beneficiaries, which provides a safe option to protect assets.

Before deciding on an option to purchase property it might just be a great idea to speak to your legal provider to better substantiate the above options for better clarity and understanding.


  • Speak to a professional who will also advise on the financial implications of the above options.

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