1. Introduction
Property ownership in South Africa can be structured in several ways, with the most common options being:
- In your name
- Through a company (Private Company – Pty Ltd)
- Through a trust (mentioned briefly for comparison)
Choosing the optimal structure depends on your individual financial goals, tax position, estate planning strategy, and long-term intentions. This report provides a comparative analysis of owning property in a personal capacity versus through a company.
2. Ownership in a Personal Name
Advantages
- Simplicity and lower administrative burden: No need to register and maintain a company.
- Lower initial costs: No incorporation or annual company fees.
- Primary residence exclusion: If the property is used as a primary residence, capital gains tax (CGT) is reduced by the R2 million exclusion.
- Access to personal bond financing: Individuals may secure home loans at better interest rates than companies.
- No annual company tax filing requirements: Individual tax returns are simpler and cheaper to file.
Disadvantages
- Higher marginal tax rate: Income from rentals is taxed at your marginal personal income tax rate (up to 45%).
- Full estate duty exposure: On death, the property forms part of the estate and may be subject to 20–25% estate duty.
- Risk exposure: Personal assets, including property, may be vulnerable to creditors.
3. Ownership Through a Company (Pty Ltd)
Advantages
- Asset protection: Separates personal and business liabilities; property is shielded from personal creditors.
- Fixed corporate tax rate: As of 2025, South African companies are taxed at a flat 27%, which may be lower than the top personal marginal rate.
- Estate planning benefits: Ownership of company shares can be structured to facilitate generational transfers and potentially reduce estate duty.
- Efficient for multiple properties: Better suited for those building a property portfolio (especially in buy-to-let scenarios).
- Deductibility of expenses: Operating costs may be more comprehensively deductible.
Disadvantages
- Complexity and costs: Requires company registration, accounting, and compliance with CIPC and SARS.
- Dividend tax: Profit distributions are subject to a 20% dividend withholding tax, creating a potential double-taxation effect (27% corporate tax + 20% dividend tax).
- No primary residence exclusion: Companies do not qualify for the CGT exclusion on primary residences.
- Loan challenges: Financial institutions may require personal surety and charge higher interest rates on loans to companies.
4. Capital Gains Tax (CGT) Comparison
Ownership Type CGT Inclusion Rate Effective Tax Rate (at top bracket)
Personal 40% Up to 18% (45% × 40%)
Company 80% ~21.6% (27% × 80%)
Note: Primary residence exclusion (R2 million) applies only to individuals.
5. Estate Planning and Inheritance
Criteria Personal Ownership Company Ownership
Estate duty 20–25% on dutiable estate Can be structured to reduce exposure
Continuity Property enters the deceased's estate The company continues as a going concern
Transfer to heirs May trigger transfer duty/CGT Share transfer is easier, no transfer duty
6. Transfer Duty Implications
Whether you buy property personally or through a company, transfer duty is generally the same and is calculated based on the property value (unless VAT applies, which is usually the case with developers). However, the future sale of shares in a company may not be subject to transfer duty, offering planning flexibility.
7. Summary Comparison Table
Feature Personal Name Company (Pty Ltd)
Tax rate on rental income Up to 45% 27% corporate tax
CGT rate Up to 18% 21.6%
CGT exclusion on primary home R2 million exclusion available Not available
Admin burden Low Medium to high
Transfer to heirs Estate duty & transfer complications Easier share transfers
Asset protection Low High
Financing flexibility Higher (better loan terms) Lower (stricter lending criteria)
Best for Owner-occupiers or single property Investors and property businesses
8. Recommendation
Best for Individual Use / Primary Residence:
Owning in your name is usually better if:
- The property is your primary residence
- You benefit from the R2 million CGT exclusion
- You want less administrative complexity
Best for Investment / Rental Portfolios:
Owning through a company is generally better if:
- You're acquiring multiple properties
- You plan to operate as a property investor or landlord
- You want asset protection and long-term estate planning flexibility
9. Alternative Option: Trusts
Though not the focus, trusts offer a middle ground:
- Pros: Strong asset protection, good for succession planning.
- Cons: High CGT (36%), higher setup/admin costs, more scrutiny from SARS.
10. Conclusion
There is no one-size-fits-all answer. The best method to own property in South Africa depends on your financial position, estate planning needs, and investment goals. For individual homeowners, personal ownership is usually the most tax-efficient. For property investors or those seeking asset protection, company ownership sometimes with a trust as the shareholder) can offer long-term advantages.
Before making a decision, it's advisable to consult a qualified tax advisor, attorney, or financial planner to tailor the structure to your circumstances.