The short answer
It will be cheaper if the house is inherited by the heir through a will.
The whole question
My son's grandmother wants to leave her house to him. What will be easier or cheaper: to transfer ownership while she is alive or leave it to him in a will. We don't have the money to pay for lawyer's fees. I also have no idea where to go in Port Elizabeth.
The long answer
I am presuming that your son is not a minor child (under the age of 18). A minor child cannot be made the owner of property because he would not have the capacity to enter any kind of lawful contract. In that case, the minor child’s legal guardian would take responsibility for administering the property until the child turned 18.
In terms of expenses, if your son inherits his grandmother’s house through a will, he will not have to pay transfer duty and SARS will issue a transfer duty exemption certificate when the lawyers that transfer ownership (called conveyancing attorneys) apply for it.
If the property is transferred to your son while his grandmother is still alive, he would have to pay transfer duty. Transfer duty must be paid on the value of the property above R1,000,000. In other words, transfer duty is only paid on a property worth over R1 million. SARS also requires two independent valuations of the property if the two parties are related to each other.
If your son’s grandmother leaves the house to him in her will, her deceased estate will still have to pay conveyancing fees to transfer ownership through the Deeds Office so that your son has the title deeds which make him the legal owner. This would also be the case if she donates the house to him while she is still alive. In either case, the conveyancing attorneys would have to be paid as well as the Deeds Office fees and the rates and levies clearance certificates. But electrical and entomologist (beetle-free) certificates are not required if he inherits the house through a will.
If she donates the house to him while still alive, she would have to pay a donations tax of 20% on the value of the property, but the first R100,000 of the value of the property is exempt from donations tax. The 20% donations tax would only apply to the balance.
When a person dies, their deceased estate has to be wound up by an executor that has either been nominated in the will or appointed by the Master of the High Court if no executor was nominated in the will. If the executor is appointed through the will, he or she would still have to obtain a Letter of Executorship from the Master of the High Court before they would be allowed to dispose of any assets of the estate.
The executor appoints the conveyancing attorneys who will do the work of the transfer process, which involves lodging documents with the Deeds Office to make sure that the house is going to the rightful heir and is in line with Section 42 (1) of the Administration of Estates Act. But these attorneys can only transfer the property when all the assets of the estate have been made known to the general public (through adverts in newspapers and the Government Gazette) and reflected in the Liquidation and Distribution Account which must be approved by the Master of the High Court. This is because one of the jobs of the executor is to pay all the debts of the estate before any assets can be transferred. Depending on the value of the house, the conveyancing will charge anything from R7,600 upward.
You would need to compare what it would cost for your son’s grandmother to donate the house to your son during her lifetime, in terms of the value of the house and the taxes involved, or if it would be simpler to leave it to him in her will. Whatever her decision, it is always a complicated and costly business to transfer ownership of property.
If your son’s grandmother needs legal advice on how to proceed, she could ask Legal Aid for advice and assistance. Legal Aid is a means-tested organisation which means that if they find that she cannot afford a lawyer, they must assist her. Here are their contact details in Port Elizabeth:
Address: 564 Govan Mbeki Avenue, North End
Tel: 041 408 2800
0800 110 110 (Monday to Friday 7am - 7pm)
079 835 7179 (Please Call Me)
Wishing you the best,
Answered on Sept. 10, 2021, 10:07 a.m.
Please note. We are not lawyers or financial advisors. We do our best to make the answers accurate, but we cannot accept any legal liability if there are errors.