Rethinking the title of your property...

Back in the infamous Zim dollar days, everyone wanted to put their property into company names. This way, the buyers avoided transfer fees and the sellers avoided paying capital gains tax. There were other reasons too, but these are probably too shady for a reputable agent such as myself to know about...

It now seems that there are more disadvantages to owning a property in a company name than the financial advantages of transfer fee avoidance for your future, potential buyers. I have listed some of the points below, but by no means is the list comprehensive:

1. The myth of not having to pay capital gains tax on the sale of a property owned by a company OR TRUST needs to be debunked as soon as possible. The sale of shares of any description is liable for a 20% capital gains tax. You may be able to find a clever account to perform some creative accounting to avoid the tax, but somewhere down the line these loop holes will be closed and you will be liable for the tax.

2. If you are over 55 years old and the property you are selling is your principal primary residence (your home, in layman's terms!), then you may apply to ZIMRA for Capital Gains Tax exemption. If the property is in your name, then it is much easier to explain to ZIMRA that it is in deed your home and you are eligible for the exemption. If it is in a company name, then there will be all sorts of questions and at the end of the day, you may not get the exemption, as a company can't have a home, because although a company may be a legal entity: it does not need to sleep somewhere!!!!

3. If the owner of the house was to die, the family would not have to pay death duties on the principal primary residence (yes, the home), but only if the property is in the deceased person's name. If it is in a company name, the Master of the High Court will demand his pound of flesh, at the most vulnerable time in the grieving family's life. The last thing you need is trying to find money for the death duties on your home when you have lost a loved one.

4. There is the ever present fear of the 51% indigenisation bill. Personally, I don't see this reaching as far a shelf companies which own houses, but then I am the eternal optimist and this is Zimbabwe, so anything goes, and generally the more unexpected the more likely the event will occur. (What a conundrum that is!)

5. The last point, which comes to mind is the fact that most banks will not loan you money to buy a house in a company name, and so as a buyer you will still have to pay transfer fees to put the property in your name. This whole process thus defeats the reason for the company name and the proposed transfer fee avoidance.  Banks are also reluctant to lend you money against a property in a company name. This is because ownership of the company can be transferred without it affecting the change of ownership on the title deeds.

My advice therefore, is to put your own home in your personal name. If you buy and sell properties as investments then I don't think it matters which way you choose as you will be selling it on. But remember even if you put it in a company name, you will still have to pay tax on the sale of the shares.

Advice to Landlords In Zimbabwe

In most cases, property is your biggest investment and it is important to ensure that if you rent it out, it will be taken care of. So often, tenants devalue your property by their mistreatment, neglect and abuse of your most prized possession. If you are a non-resident landlord, it is essential to employ a reputable estate agent to manage your property and protect your investment.

Most estate agents do inspections at the start and end of a lease. But, a good agent will do random inspections, in order to check that the property is being maintained: the pool should be full and blue, the garden should be cared for and the house should not be overcrowded or unclean. It also helps to identify potential problems early on, if inspections are done regularly.

A good agent will also ensure that all utility bills are paid up to date. At the moment, in Zimbabwe, so many homeowners are in arrears with their utility bills that City of Harare is now taking legal action and trying to attach the properties which are in arrears. Can you imagine your shock and horror, if your property is taken from you because of unpaid bills that you thought your tenants were paying??? It doesn't bear thinking of!

Choosing the right tenant from the onset is ESSENTIAL, as the Rent Board in Zimbabwe favours the tenants and it is very difficult to have them evicted even for the non-payment of rent and utility bills. The Rent Board will also decide what is a fair rent, if the rental is ever disputed. These rent dispute cases can take years to come to court and in the meantime, you, the landlord will be earning a pittance on your rental. The right Estate Agent will vett all potential tenants and do credit checks on the prospective tenants so that you have as informed a decision as you can possibly make about the people who will be living in and caring for your valuable asset.

At the moment, without first seeking approval from the Reserve Bank of Zimbabwe, all rental revenues are legally permitted to be remitted to anywhere in the world that the landlord resides. So, investing in Zimbabwean property for lease is an excellent way to secure your money and earn a passive income from anywhere in the world, as long as you have a great tenant and a fantastic agent! There are no restrictions on foreign investors buying property in Zimbabwe. The property market has continued to appreciate on a consistent basis since 2000. So, if you have money to invest, property in Zimbabwe is a very good option. You will get a fantastic return on your money, and when you eventually sell, you will be able to remit your money back to the country of origin, provided you have followed the correct process to bring the money into the country initially.

For advise and help with residential and commercial leasing, contact Page Properties. www.pageproperties.co.zw