Property the right questions to ask?
“Price growth in the South African housing market slowed down further in July 2013, according to the Absa House Price Index report, which shows that middle-segment house price growth recorded nominal growth of 9.8 percent year-on-year (y/y) in July from 10.8 percent y/y in June.”
“Over the last 20 years, the average house price has gone up by more than R1 million, meaning quite a handsome return over a period...” (b)
Your primary residential property in a marriage is most probably your biggest asset in your combined estate. If you are married ANC with accrual or in community of property then you have a claim against this property when you get divorced. The question however is how does one go about dividing the estate?
Some questions that you need to ask:
- Should you sell the primary residence?
- Do you keep it until the children are grown?
- Should you rent it out?
- Should you keep the home and buyout your soon to be ex-spouse, or vice versa?
- Can either of you afford to keep it after the divorce?
- Would the value of a debt free property reduce monthly maintenace payable towards your children.
Should you sell the primary residence?
If you both have other properties that you own and can afford to relocate and it makes financial sense then selling would be a solution. This give you that “clean-break” solution and cut ties. Ensure that you get a fair price especially when the property market has retracted or slowed down. The wording in your settlement agreement will be very important. Don’t rely on trust, rather sign an agreement that the property should be sold at a certain price to which both parties agree etc.
Do you keep it until the children are grown?
This will tie in with the maintenance issue. Should you have a low bond or the property is debt free then it makes sense for the children and the primary care giver to remain in the house. This will reduce monthly expenses and maintenance cost. Agree on a date in the future that the property will be sold. This will also give the other spouse additional cash flow to buy a another property.
Should you rent it out?
Renting your property out could generate additional income to supplement the running cost of 2 households and it definitely creates wealth in the future. This also gives you an opportunity to add an additional cottage to an existing property that you can rent out.
Should you keep the home and buyout your soon to be ex-spouse, or vice versa?
This is a solution if you have to divide the estate in half. An example would be for one party to retain the residential property and the other party to retain the retirement fund as long as they are of equal value and both parties under stand the risk and cost associated with this decision.
There is no transfer duty payable on divorce when a property is transferred from one spouse to the other. Also note that there is no CGT payable when transferring a property when you divorce even if you have more than1 property that is transferred.
Disclaimer: All the information supplied by this website are intended as guidelines only, it is advisable to contact Divorcesmart directly for appropriate advice for your unique circumstances