Purchasing residential property in South Africa involves more than just negotiating the price and signing the offer to purchase. One of the most strategic and often overlooked decisions is how to hold ownership of the property. Buyers frequently ask whether it is better to register the property in their personal name, through a company, or under a trust.

Each structure carries distinct legal, tax, and estate-planning implications. Selecting the right one can significantly affect your long-term financial position, succession planning, and tax exposure.

Below is a comparative guide on the advantages and disadvantages of each ownership option.

Buying Property in Your Personal Name

Advantages

• Primary Residence Relief: When selling your main home, the first R2 million of capital gain is exempt from Capital Gains Tax (CGT) under South African tax law.
• Lower Transaction Costs: Buying in your own name is the simplest and most cost-effective route, with no need to establish or maintain a separate legal entity.
• Easier Financing: Most financial institutions prefer lending to individuals, which can result in faster bond approvals and more favourable interest rates.

Disadvantages

• Estate Duty Exposure: On your death, the property is included in your estate, potentially attracting estate duty.
• Creditor Risk: The property remains vulnerable to attachment by personal creditors or litigation claims.
• High Personal Tax Rates: Rental income is taxed at your marginal rate, up to 45% for high-income earners, reducing net yield on investment properties.

Best for: First-time homeowners or buyers intending to occupy the property as their primary residence.

Buying Property Through a Company

Advantages

• Limited Liability: The property is legally owned by the company, offering a layer of asset protection and separation from your personal estate.
• Succession Planning: Shares in the company can be transferred rather than transferring the property itself, streamlining succession or business restructuring.
• Flat Tax Rate: Corporate income is taxed at a fixed 27% (2025 rate), often lower than personal marginal rates for higher-income individuals.

Disadvantages

• Capital Gains Tax: Companies face a higher effective CGT rate (approximately 21.6%), with no primary-residence exemption.
• Dividends Tax: Distributing profits to shareholders incurs an additional 20% dividends tax, creating a double-taxation effect.
• Financing Challenges: Lenders frequently request personal sureties from directors or shareholders before approving loans.

Best for: Investors acquiring rental portfolios, development projects, or commercial holdings rather than primary residences.

Buying Property in a Trust

Advantages

• Estate Planning Efficiency: Property held in a trust does not form part of your personal estate, reducing exposure to estate duty and enabling smooth intergenerational wealth transfer.
• Continuity: A trust continues to exist even after the founder or beneficiaries pass away, ensuring uninterrupted asset management.
• Asset Protection: Properly structured trusts can protect property from personal creditors and future liabilities.
• Tax Planning Flexibility: Income or capital gains may be distributed to beneficiaries in lower tax brackets, optimising the overall tax position of the family or trust group.

Disadvantages

• Administrative Burden: Trusts require ongoing compliance, including annual financial statements, tax returns, and reporting to the Master of the High Court.
• High Tax on Retained Income: Any undistributed income is taxed at a flat rate of 45%, necessitating thoughtful distribution planning.
• Financing Limitations: Banks are generally reluctant to lend to trusts without personal guarantees.
• No Primary Residence Exemption: Unless it qualifies as a special trust, the R2 million CGT exemption does not apply.

Best for: Long-term wealth preservation, estate planning, and family asset protection, particularly where properties are meant to be retained across generations.

Conclusion

There is no one-size-fits-all ownership model. The optimal structure depends on your personal objectives, whether that’s tax efficiency, succession planning, or creditor protection.

Objective	Recommended Option
Personal residence and simplicity	Personal name
Property investment or development	Company
Long-term estate planning and protection	Trust

Before committing to a purchase, buyers should seek specialised legal and tax advice to ensure the transaction is structured correctly from the outset. Choosing the wrong ownership vehicle can lead to unnecessary tax exposure, financing challenges, and administrative complications.

Expert Legal Advice on Property Ownership

At Mayet & Associates Attorneys, we assist clients with property transfers, trust formation, tax structuring, and estate planning. Our attorneys work closely with conveyancers and financial advisors to ensure your property investment is secure, compliant, and strategically structured.

📞 Contact us today for professional guidance before signing your next offer to purchase.