Where a half-share transfer takes place pursuant to a divorce order or an inheritance, such transfer may be exempt from transfer duty. It must, however, be borne in mind that SARS is entitled, in terms of the Transfer Duty Act, to levy transfer duty on the fair market value of the property. Transfer duty is therefore calculated on the full value of the property and then apportioned according to the share being transferred, and not merely on the lower value of the half share being sold.
Example: At the time of writing, transfer duty payable on a property valued at R2.8 million would amount to R91 200. Should a half-share transfer be concluded, the purchaser would be responsible for the payment of R45 600 in transfer duty, and not R5 700, which would ordinarily be payable on a property valued at R1.4 million.
In other words, transfer duty is not calculated solely on the value of the half share being transferred, but rather as a proportionate percentage of the transfer duty payable on the full market value of the property.
Fair market value is generally determined by obtaining two independent estate agent valuations. These valuations should reflect definite market values and not estimated “parameter” values, as SARS may assess transfer duty based on the higher of the two valuations provided.
