Divorce orders: when does transfer duty apply?
PROPERTY advisers are often asked about issues relating to divorce and transfer duty, according to Leapfrog Property Group.
Chief executive Bruce Swain said that in terms of the Transfer Duty Act transfer duty did not apply when a property was awarded to a spouse in a divorce order.
“However, in the event that the property is not awarded to the spouse, and the couple reach an agreement outside the court, the property will be liable for transfer duty and payable by the spouse who acquires the property,” said Swain.
Swain said that, similarly, when people were married in community of property, a spouse immediately became the owner of a half-share of the property without having to pay transfer duty, and the transfer duty exemption applied to all marital regimes and civil unions.
He said the exemption of transfer duty also did not apply in the case where a property was registered in a trust. “The exemption only comes into effect when one spouse had sole ownership of the property, or a whole of a portion of the ownership of the property, and that property is acquired by the other spouse. “What’s also important to note is that the transfer duty is payable by the spouse who acquires the property…
“The transfer duty in this case is based on the value of the property, rather than the price. In most cases, though, the price is deemed to be the value of the property,” he said.
Swain added that typically the spouse who acquired the property from a trust had to settle the transfer duty within six months of the divorce order being granted, as this was the date deemed to be the “transaction” date. He advised consumers to make provision for this, as hefty penalties applied on late payments.
Swain said when a decision had been taken to award a property to one spouse in a divorce case, it needed to be recorded as such.
He said that, according to the Deeds Registration Act, a written application might be made by the spouses of a former marriage in community of property to the registrar to endorse the title deed of the property.
“The endorsement serves to confirm that formal transfer has taken place, that the property has been released from the bond (if the property is bonded), and confirms that the transferee is solely responsible for the bond,” said Swain.
He said occupational rent might also come into effect when a property was transferred from one spouse to another if one spouse continued to live in the property after finalisation of the divorce.
“A divorce is very difficult to deal with, for all parties involved. Throw a property into the mix, and it becomes even more complex, which is why it is pertinent to seek the help and advice of a property professional and legal expert to ensure a fair deal.”