Even though inheriting a property is a financial boost to anyone’s estate, receiving a property as an inheritance can be quite complicated, making it difficult to manage while grieving a loss of a loved one. There is a number of things to consider when you have inherited a property. 

Inheriting a property will substantially increase the value of the assets of the heir and as property has a long track record of rising in value, it is a significant increase in a person’s or family’s personal wealth. The inherited home or apartment can be rented out to provide passive income, and any appreciation in value will help the heir’s asset portfolio develop.  

The downsides of property inheritance heirs must consider are the costs for upkeep, potential improvements, levies as well as the monthly rates and taxes which can become quite expensive. 

Tax on inherited property 

When a property is inherited, there are no tax implications on the heir as the tax implications would fall onto the deceased’s estate. But it is important to remember that if the property is sold, the heir may be required to pay Capital Gains Tax.  

Personal rights registered over the property 

An heir can inherit a property subject to another beneficiary of the estate having a personal right to either inhabit the property (right of habitation) or having the right to inhabit or rent out the property and enjoy the fruits of the property (right of usufruct). These personal right limits the heir’s rights to mortgage or seller a property. 

Transfer duty on inherited property 

Transfer duty is a tax paid on the sale of immovable property that is payable to the South African Revenue Services (SARS) when the property is transferred from the previous owner to the new owner. Prior to the transfer, the Purchaser must pay Transfer Duty to SARS, and SARS will in turn issue a ‘Transfer Duty Certificate’.   

However, due to the fact that the property was inherited and not ‘sold’, there will be no transfer duty charged on its worth and on application by the applicable transfer attorneys, SARS will provide a transfer duty exemption certificate. 

A minor inheriting property 

In circumstances when a minor inherits property through a will or Intestate Successions Act, the law provides for and recognises that the minor child may own the inherited property and can transfer it with the aid of their legal guardian and with permission of the High Court. This implies that even if the minor child is the legal owner of the property, the legal guardian is in charge of managing it until the child reaches adulthood and is deemed capable of handling his or her own affairs.  

Lastly, it is important to scrutinize the title deed, this is to ensure that you know exactly what you are inheriting and what restrictions may be applicable to the use and enjoyment of the inherited property.