Your name, a company, or a trust? How to hold property in South Africa
16 August 2025
Solaris Law
News
When buying property in South Africa, a key decision is whether you should register it in your own name, a company, or a trust. Each option has unique tax, estate planning, and asset protection consequences. Here is how they compare.

Individual

The benefits of holding property in your own name are the following:

  • Individuals pay capital gains tax (CGT) at a relatively low maximum effective rate of 18%.
  • If the property is your “primary residence”, the first R2 million of the capital gain arising on the disposal of the property is free of CGT.
  • Holding property in your own name is a simple affair.

The main disadvantage of holding property in your own name is that the asset falls into your estate for purposes of CGT and estate duty, and for purposes of your personal liability to creditors.

Company

The benefits of holding property through a company are the following:

  • The property cannot be attached by your personal creditors. (But note that you will hold the shares in the company, and the shares could be attached by your personal creditors.)
  • Companies pay income tax at a relatively low rate of 27% and pay CGT at a relatively low rate of 21.6%.

The disadvantages of holding property through a company are the following:

  • If the property is your “primary residence”, you do not qualify for the R2 million exclusion.
  • A company comes with administrative burdens, for example, preparing accounts, annual returns, tax returns, and the like.
  • The shares in the company will still fall into your estate for purposes of CGT and estate duty.
  • Notably, if the company declares profits dividends tax will arise at a rate of 20%, unless an exemption applies. Dividends tax pushes up the effective tax rate significantly

Trust

The benefits of holding property through a trust are the following:

  • The property cannot be attached by your personal creditors.
  • The property does not fall into your estate for purposes of CGT and estate duty: when you die, the trust continues to endure.

The disadvantages of holding property through a trust are the following:

  • Trusts pay income tax at a high (flat) rate of 45% and pay CGT at a high (flat) rate of 36%. (Note that, if the trustees allocate income and capital gains to beneficiaries, then the incidence of tax is on the beneficiaries who may well pay income tax and CGT at a much lower rate. The problem with allocating income and capital gains to beneficiaries is that the amounts fall into the estates of the individuals concerned. That effect may negate the reason why a trust may have been formed in the first place.
  • If the property is your “primary residence”, you do not qualify for the R2 million exclusion unless you have a right of use of the property.
  • A trust comes with administrative burdens, for example, preparing accounts, trustees’ meetings, tax returns and the like.
  • If the trust is a discretionary trust, you will divest yourself of the ownership of the property, which will vest in the trustees. So, you will not have control over the property.

Non-residents

Non-residents pay income tax and CGT on income and capital profits arising in their hands on property situated in South Africa at the same rate as South African persons and entities.

The advantages and disadvantages set out above apply equally to non-residents.

Note that a trust cannot allocate income and capital gains to non-resident beneficiaries to take advantage of lower tax rates. In other words, the trusts are always taxed in their own names at the applicable (high) rates.

Top tips

  • You should most likely own your “primary residence” either in your own name, or through a trust where you have a right of use of the property.
  • A property that you would like to hold for generations, for example a holiday home, you may wish to place in a trust. But, to avoid disputes between the beneficiaries, make sure that you also fund the trust with cash to enable the trustees to pay rates and taxes, insurance and maintenance costs.
  • If you are buying commercial property (for example, a factory) that you will use for your operating business (for example, a manufacturing business), consider placing the property in one company and the operations in another company. The property could then lease the property to the operating company. The benefit of this structure is that, if the operating company were to go under for some reason, it would not affect your holding of the property.
  • Non-resident individuals who buy residential properties in South Africa should most likely do so in their own names.
  • However, non-residents who prefer to hold their assets through companies should consider setting up an offshore company to hold the property. The offshore company will account for taxes in South Africa at the same rates as local companies. But, notably, there will be no dividends tax. Note that, if the shareholder who holds the shares in the company sells the shares in the company while the property makes up 80% or more of the value of the company (that is, it is considered “property-rich”), there may still be CGT in South Africa on the sale of the shares.

Ben Strauss & Margot Basson

Please note that this article is published for information purposes only and does not constitute legal advice. Always obtain professional advice before implementing any transaction.