Natural person, company or trust?

There are advantages and disadvantages to owning property as a natural person, in a business or in a trust. The entity you choose will depend on:

  • The purpose of the property.
  • Your personal situation at the time of purchase.
  • Your foreseeable circumstances in the future.

If you are buying your first home and plan to move into it, you will most likely register title to your property as a natural person.

If you are building a real estate portfolio or intend to own one or two units to supplement your income, you may want to register a business as the owner of the properties.

If you are planning for the security of your future heirs or if you want to financially protect your spouse, it might be a good idea to consider setting up a trust in which to own property.

Natural person

For properties registered in a natural person’s name, the benefits include:

  • There are no annual auditor or accounting fees to pay.
  • On the death of the owner, inheritance tax is due if the property is registered in the name of a natural person. However, the tax paid should be less than if the property was owned by a corporation or a trust. In addition, no inheritance tax is payable on estates of Rand 3.5 million or less.
  • If you have a property registered in your name as a natural person, when you sell it, the first profit of R 1.5 million will be exempt from capital gains tax (CGT) – if it this is your primary residence.


  • The second property and the following ones will accumulate the CGT.


If your plan is to own a few properties and expand your real estate portfolio, it may be advisable to register a business and purchase the properties on behalf of the business.

  • The company must be registered with the Companies and Intellectual Property Commission (CIPC).
  • The company must submit annual reports – which must be prepared by an accountant – within 30 days of the anniversary of the establishment of the company.


  • You can deduct expenses such as bookkeeping costs and business maintenance costs.


  • When buying on behalf of a business the costs are higher, and there are other costs down the road if the property is sold.
  • Accounting and registration fees are payable annually.
  • In addition to income tax on property income, there will be dividend tax payable.


Trusts are often preferred for estate planning.


  • No transfer tax is payable when the property is transferred to the heirs or to the members of the trust.
  • No annual accounting or auditor’s report is required.


  • Setting up a trust is expensive and requires legal assistance.
  • Using a trust as a vehicle for real estate property results in the highest income tax rate.


To justify the cost of running a business or trust, you need to calculate how much rental income will remain after deducting maintenance and repair costs.

You need to think carefully about how you want to buy a property before you sign the offer to purchase. Decide up front if you are likely to continue investing in real estate as a business or if you see it more as a hobby, with only one or two properties in addition to your primary residence.

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