Q: My client has
passed away in late 2014. Must I declare the transfer of his primary residence
to his wife and claim the 50% of the R2 million exclusion? Do I complete the
full amounts of proceeds and base cost or only 50%?
A: We assume that
the deceased bequeathed the 50% interest in the property owned in community to
the surviving spouse. In terms of
paragraph 40(1) of the Eighth Schedule to the Income Tax Act this would then
not be treated as a disposal at the date of death of the first-dying. The capital gain (loss) will effectively be
rolled over – see also paragraph 67.
If the above doesn’t apply (unlikely) the proceeds will also
be 50% of the market value at date of death – see paragraph 14 of the Eighth
Schedule. The primary residence
exclusion would then also be apportioned – see paragraph 45(2).
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.