Living Zimbabwe

Tag: property

  • Rethinking The Title Of Your Property In Zimbabwe

    Back in the infamous Zim dollar days, everyone wanted to put their property into company names. This way, the buyers avoided transfer fees and the sellers avoided paying capital gains tax. There were other reasons too, but these are probably too shady for a reputable agent such as myself to know about…

    It now seems that there are more disadvantages to owning a property in a company name than the financial advantages of transfer fee avoidance for your future, potential buyers. I have listed some of the points below, but by no means is the list comprehensive:

    1. The myth of not having to pay capital gains tax on the sale of a property owned by a company needs to be debunked as soon as possible. The sale of shares of any description is liable for a 20% capital gains tax. You may be able to find a clever account to perform some creative accounting to avoid the tax, but somewhere down the line these loop holes will be closed and you will be liable for the tax.

    2. If you are over 55 years old and the property you are selling is your principal primary residence (your home, in layman’s terms!), then you may apply to ZIMRA for Capital Gains Tax exemption. If the property is in your name, then it is much easier to explain to ZIMRA that it is in deed your home and you are eligible for the exemption. If it is in a company name, then there will be all sorts of questions and at the end of the day, you may not get the exemption, as a company can’t have a home, because although a company may be a legal entity: it does not need to sleep somewhere!!!!

    3. If the owner of the house was to die, the family would not have to pay death duties on the principal primary residence (yes, the home), but only if the property is in the deceased person’s name. If it is in a company name, the Master of the High Court will demand his pound of flesh, at the most vulnerable time in the grieving family’s life. The last thing you need is trying to find money for the death duties on your home when you have lost a loved one.

    4. There is the ever present fear of the 51% indigenisation bill. Personally, I don’t see this reaching as far a shelf companies which own houses, but then I am the eternal optimist and this is Zimbabwe, so anything goes, and generally the more unexpected the more likely the event will occur. (What a conundrum that is!)

    5. The last point, which comes to mind is the fact that most banks will not loan you money to buy a house in a company name, and so as a buyer you will still have to pay transfer fees to put the property in your name. This whole process thus defeats the reason for the company name and the proposed transfer fee avoidance. Banks are also reluctant to lend you money against a property in a company name. This is because ownership of the company can be transferred without it affecting the change of ownership on the title deeds.

    My advice therefore, is to put your own home in your personal name. If you buy and sell properties as investments then I don’t think it matters which way you choose as you will be selling it on. But remember even if you put it in a company name, you will probably still have to pay tax on the shares. The very best way to avoid this is by putting the property into a trust…I’ll explain this in the next blog!

    For more advice contact me at nicky@pageproperties.co.zw

    This has been a submission by Nicky Versfeld. If you have something to share, you too can become a Citizen Journalist by submitting your story here: Citizen Journalism by Living Zimbabwe.

  • Our Fiduciary Duty to YOU The Public

    Our what? Exactly! Who even understands big words like that? Not many, but it is my job to understand, and explain it to you so that you know what is expected of someone who presents themselves to you as an Estate Agent.

    Estate Agents in Zimbabwe are controlled by a very strict set of conduct rules that most of the public are completely unaware of.

    When one becomes registered as an Estate Agent in Zimbabwe, they have had to have had at least 3 years practical experience in the industry and pass a rigorous set of exams. The most important of which is Estate Agency Practice. This covers all the legal aspects of property sales and rentals, as well as an Estate Agent’s Duty to the Public.

    I have listed below, in English, not legalese, what you not only can expect, but must demand from your Estate Agent:

    1. An agent must put the interests of his client above his own at all times, and must treat the business dealings of his clients as well as he would treat his own, if not better. This means that you can and should demand confidentiality at all times from your agent. He should never try to purchase or lease your property himself, without having first made it very clear to you of his personal interest.

    Any Estate Agent is obliged to offer you advice and professional knowledge about the industry, regardless of whether you employ his services. (Much like a doctor is obliged to save lives even if they are not his patients!)

    2. Agents should not defame other agents, or treat them in a manner that is inconsistent with fairness, courtesy and professionalism.

    3. Agents should not tout, i.e. should not try to canvass for business by door to door calling. They should not approach you if your house is on the market and ask to sell it. So many people don’t realize this and an agent will call them and say, “I have a buyer for your house, please can I bring them around?” If the property is with another agent then you should tell the caller, that they must go through your appointed agent. Sellers can get themselves into all sorts of trouble when allowing a non mandated agent to sell their property as they will be liable for the mandated agent’s commission, even if that agent did not sell the property.

    4. Agents should not pose as buyers to illicit information from sellers or other agents.

    5. Money held in an agent’s trust account does not belong to the agent, and under NO circumstances is that agent allowed to use the money for the running of his business or personal expenses, (not even bank charges!) The agent should not move any money in the trust account out of the account without the written permission of the owner of that money. The number of cases that exist of agents “borrowing” money from the trust account and never repaying it, is quite frightening.

    The deposit paid for a rental property belongs to the tenant until the end of the lease, and at such time the money will either be returned to the tenant or used to repair the property and pay outstanding bills.

    At any stage that you have money in an Estate Agent’s trust account, you can and probably should ask to see a statement. All rental properties should have a monthly statement of their account forwarded to the owner and tenant, if the tenant requests it.

    If at any stage, you feel an agent is not fulfilling these obligations, you can report them to the Estate Agents Council, and the matter will be taken up by them. If you have been unfortunate enough to lose money from an Estate Agent’s Trust Account, the Estate Agents Council has a Compensation Fund, which all agents have to pay money to each year, so that the public can be reimbursed for their losses. Bet you didn’t know that…I am letting out all the secrets today, aren’t I?

    But remember, you have the right to expect the best from the person you are entrusting with your most valuable possessions, so don’t settle for less…

    Visit my website for more on property www.pageproperties.co.zw

    To read more articles like this visit my blog http://www.pageproperties.blogspot.com

    This has been a submission by Nicky Versfeld. If you have something to share, you too can become a Citizen Journalist by submitting your story here: Citizen Journalism by Living Zimbabwe.