Deceased Estates - Options

If a person has immovable property registered in their personal name  when they die, their Estate will be subject to the following costs;

If a person has immovable property registered in their personal name  when they die, their Estate will be subject to the following costs;

1. Master’s fee of 4% of the gross asset value of the Estate;
2. Should you employ the  services of a professional Administrator of Estates they are entitled to  charge a fee of 4.3% of the gross asset value of the Estate plus value  added tax (15% of the fee);
3. Estate Duty is calculated at  5% of the net asset value of the Estate. However, the first US$50 000.00  is exempt from Estate Duty. The value of the deceased’s primary  principal property is also exempt from Estate Duty.
4. If any immovable property is  left to a beneficiary in terms of the deceased’s Last Will and Testament,  then the beneficiary will be required to pay the conveyancer a  transfer fee based on the Law Society of Zimbabwe Tariff (not more than  4% of the value of the property plus value added tax (15% of the fee).  There is no government stamp duty payable.

Should a person wish to transfer their property to a beneficiary during their lifetime they will incur the following costs:

1. If the property is your primary principal property and you are over  the age of 55, years you can apply to ZIMRA for an exemption from  capital gains tax. If not, then capital gains tax is payable at 5% of  the value of the property if the property was acquired before February  2009. If the property was acquired after this date, then capital gains  tax is payable at 20% on any capital gain made on the property as  approved by ZIMRA. This will apply whether the property is sold or  donated to the beneficiary.
2. Transfer fees and government  stamp duty as per the Law Society of Zimbabwe Tariff which should not  exceed 8% of the value of the property.

Advantages/Disadvantages of owning a property in your personal name:

1.  Advantage - Should you be over 55 years old and the property is  your primary principal residence and you decide to sell it during your  lifetime you can apply for an exemption from capital gains tax.
2. Advantage - Should the property be your primary principal property  and you are selling it to purchase another property to use as your  primary principal property, you can apply to ZIMRA for a rollover of  your capital gains tax.
3. Disadvantage - The property will form part of your Estate on your death and will be subject to the costs indicated above.

Advantages/Disadvantages of owning a property in a Company

1. Advantage – In the case of a deceased estate, there are generally  no advantages of having a property in a company name unless the shares  of the company are held by a trust.
2. Disadvantage – No funds from the sale of a property owned by a  company can be externalized without Reserve Bank approval and this can  take time.
3. Disadvantage – There is no exemption allowance if the property  does qualify as a prime principal residence as in is not in a personal  name.

Anyone over 55 should seriously consider taking the time to consult  their lawyer and accountant to work out the most tax efficient way to  leave their property to beneficiaries.