A reader wants to know whether she and her husband should take out a bond to fund renovations to a fixed property her parents want to give to them.
She says the property, in which they intend to reside in the future, is not bonded.
Property, whether fixed or movable, is generally transferred from one person to another by way of sale or donation.
Fixed property is often of considerable financial value and the transfer will attract fees or costs of some nature.
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In the normal course of selling a property, the purchaser is typically liable to pay prescribed transfer duties calculated in accordance with the value of the property concerned.
In addition, there are transfer costs, including the conveyancer’s fees and other disbursements, which are determined by the property’s value.
The sale of the property may also trigger financial implications on the part of the seller, such as capital gains tax.
Should the property be transferred from one person to another on the basis of a donation, with the recipient not paying any purchase price, there may be donations tax implications.
Often in these circumstances, and to simplify the process and alleviate some of the financial implications, the owner bequeaths the property to the person concerned in his will, thus allowing for its transfer in the desired manner upon his demise.
The transfer of the property from the estate of the deceased means there are no transfer duties payable as part of the transfer process.
However, other costs and fees will have to be paid.
The reader, however, will not necessarily benefit should she wait for the house to be transferred from the estate of the parent concerned.
As they intend to take out a bond on the property they would have to be the registered owners.
Should the parents bond the property in their own name and allow our reader to use the funds, this would result in a potential financial burden for them should there be any default in the payment of the instalments.
The property would also then be jeopardised and at risk of attachment by the bondholder.
There is also risk to the reader if she invests her money in the property prior to transfer as the parents could, unbeknown to her, bequeath the property to a third party.
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