I read the article about purchasing a property using a trust, and was wondering if the same is possible but using a company (SPV).
Further, do bonds provide property finance if a joint bond is done among several people but the property is purchased in the company's name?
Fiduciary Institute of South Africa member Keith Cullis of Tax Monitor responds:
A property can be bought in an SPV in a Pty, but any gains made once the property is sold would attract two types of taxation.
The first is capital gains tax (CGT) if you make a capital gain on the property, while the second is withholding tax on dividends (WTD) should you wish to distribute the reserves once the property is sold.
The issue of a bond is a credit approval one, so if a property is held in the name of a Pty with, say, two directors and 10 shareholders, then the institution granting the credit for the purchase of the property will either request surety/deposit from one or all of the shareholders/directors, or even an unconnected third person.
A good example would be a young couple buying a house, but the son's parents stand surety for them.
Therefore the short answer is yes, but the terms and conditions will depend on the institution granting the credit.
A final thought would also be that subject to the New Credit Act, it is not only the banks that grant bonds. Bonds can also be granted by institutions outside banks and private entities.
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