My father has sold his house at a discounted price to my eldest sister and some of the proceeds of the sale will be split between the remaining siblings. What are the tax implications for my father and is there any way to minimize the taxes which will be levied on him?
The difference between the market value of the house and the discounted price will be considered a donation and will be subject to donations tax at 20%. However, there is an annual exemption of R100,000 per person per year so the donation amount exceeding R100,000 will attract tax. Please read our blog on Donations Tax for further details.
He could give the donation over multiple tax years so as to take advantage of the R100,000 annual exemption.
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