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One spouse passes away and the house is transferred to the surviving spouse: any CGT?

Tuesday, 30 June 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

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. 



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