Company vs Personal Property Calculator
Compare the tax cost of buying property in your personal name, a private company (PTY Ltd), or a family trust — including rental tax, Capital Gains Tax, dividend extraction, and compliance costs
Detailed Tax Comparison
| Item | Personal | Company | Trust |
|---|---|---|---|
| Annual rental tax | R 64 800 | R 48 600 | R 81 000 |
| After-tax rental (extractable) | R 115 200 | R 105 120 | R 99 000 |
| Total rental tax (10 yrs) | R 648 000 | R 486 000 | R 810 000 |
| CGT on disposal (after 10 yrs) | R 175 362 | R 468 904 | R 452 804 |
| Total tax burden | R 823 362 | R 954 904 | R 1 262 804 |
CGT rates: Personal = 40% inclusion × 36%; Company = 80% inclusion × 27% + 20% dividends tax on extraction; Trust = 80% inclusion × 45%. Transfer duty is the same for all structures. Estimates do not account for deductible expenses (bond interest, rates, repairs).
Personal Name, Company or Trust — Which is Best? Structures • Tax • Example
The Four Main Property Holding Structures
South African law does not restrict who may own property — individuals, companies, close corporations (CC), and trusts may all hold immovable property. The choice affects annual income tax, Capital Gains Tax (CGT) on disposal, estate duty, and compliance costs.
- Personal name: Simplest structure. Rental income taxed at your marginal rate (18%–45%). CGT uses 40% inclusion rate. No setup costs. Property forms part of your estate on death.
- Private company (PTY Ltd): Corporate income tax at flat 27%. CGT uses 80% inclusion rate (effective ~21.6%). Dividend withholding tax of 20% on any profit extraction. Setup ~R3,000. CIPC annual return R100 plus accounting fees.
- Trust: Trust income taxed at flat 45% (highest rate). CGT: 80% inclusion at 45% = effective 36%. Benefit: property falls outside your personal estate, reducing estate duty. Setup R5,000–R15,000; annual accounting R5,000–R15,000.
- Close Corporation (CC): New CCs may no longer be registered since 2011, but existing ones remain valid. Same tax treatment as companies.
Key Tax Rates at a Glance
Company: CIT 27%. CGT: 80% inclusion. Dividend tax 20% on extraction.
Trust: Flat 45% on income. CGT: 80% inclusion at 45%.
Transfer duty is the same regardless of which structure purchases the property — it is based on the property value and is paid by the buyer.
Worked Example — Naledi's Investment Property
Naledi is buying a R2,000,000 investment property earning R180,000/year in gross rental. She is in the 36% marginal tax bracket and plans to hold for 10 years.
In personal name: Annual rental tax = R180,000 × 36% = R64,800. Over 10 years: R648,000 in rental tax. If the property appreciates to R3,258,000 (5% p.a.), CGT on the R1,258,000 gain = R1,218,000 × 40% × 36% ≈ R175,392. Total tax ≈ R823,392.
In a company: Annual rental tax = R180,000 × 27% = R48,600. Over 10 years: R486,000. CGT = R1,258,000 × 80% × 27% + 20% dividend tax on remainder ≈ R272,000 + R161,000 = R433,000. Total tax ≈ R919,000 — but compliance costs add R35,000+.
Key insight: For lower marginal rate taxpayers, personal name is often most efficient. For high earners (41–45% bracket), a company can reduce the rental tax bill, but the higher CGT inclusion rate and dividend extraction cost eat into the saving on disposal.
Frequently Asked Questions
Is it better to buy property in a company or personal name in South Africa?
It depends on your marginal tax rate, whether you plan to sell or hold, and your estate planning goals. If your personal marginal rate exceeds 27% (company CIT rate), a company saves on annual rental tax — but the higher CGT inclusion rate (80% vs 40%) and dividend extraction tax (20%) often negate this on disposal. Personal name is usually better for lower earners and for properties held long-term where appreciation is significant.
What is Section 7C and why does it matter for property trusts?
Section 7C of the Income Tax Act (effective 1 March 2017) treats interest-free or low-interest loans made by connected persons to a trust as deemed donations. If you lend money to your family trust to buy property without charging at least the official interest rate (currently 9.75%), the shortfall is taxed as a donation each year. This is SARS's measure to prevent people using trusts to shift wealth out of their estates without paying donations tax.
Can I avoid transfer duty by selling shares in a property company?
While transfer duty is not payable on the sale of company shares (unlike the sale of the property itself), SARS's General Anti-Avoidance Rule (Section 80A) and the definition of "associated enterprise" arrangements may still apply. SARS has indicated it will scrutinise share-for-property arrangements where the primary purpose is to avoid transfer duty. Always obtain legal advice before structuring a transaction this way.
Does a trust provide asset protection for property?
A properly structured trust can protect property from personal creditors because trust assets belong to the trust, not to you personally. However, courts have lifted the "trust veil" where the trust was a sham or where the founder had personal control and there was no genuine transfer of ownership. The Trust Property Control Act requires genuine trustee independence and proper administration. This protection must be weighed against the higher tax cost and compliance burden.
What are the annual compliance costs for a property company vs trust in South Africa?
A private company (PTY Ltd) requires an annual CIPC return (R100), annual financial statements, and corporate income tax returns — typically R2,000–R5,000 in accounting fees annually. A trust requires trust deed registration, annual trust financial statements, tax returns, and often trustee meetings — costs of R5,000–R15,000+ per year depending on complexity. These compliance costs add up significantly over a 10–20 year holding period and should be factored into your decision.