Selling Procedures
Selling procedures are extremely simple and safe.
Once the buyer has been found for your property and sale price, terms and conditions have been agreed upon, it is recommended that a Promise of Sale Agreement be signed with the buyer at the earliest possible.
This agreement, which is normally drawn up by the Notary, binds both parties until the signing of the final deed of contract.
On signing the Preliminary Agreement a 10% deposit, on account of the price, is normally lodged with the Notary or the Estate Agent by the buyers. This deposit will be forfeited in your favour should the buyer fail to sign the final deed for no valid reason at law.
The term of validity of the agreement is agreed between the parties, however, such agreements are nowadays valid for a minimum period of three months, sometimes even up to one year and longer. During this period, the Notary will register the Preliminary Agreement in terms of law, carry out searches into the title and apply for any necessary permits.
There are no restrictions on owners to sell their property at any price. Mainly in the case of foreign nationals, the entire sale price including sale proceeds of movables may be repatriated abroad, in which case, the Notary would apply for clearance from the local tax authorities, prior to signing the final deed of sale.
Capital Gains Tax
Capital gains tax may be charged on the sale of the immovable property.
If the property is sold within 5 years from date of acquisition, the vendor has the option to choose to be taxed either of the following:-
(i) a capital gains tax based on profit realised after taking into consideration the cost of purchase, sale, as well as any improvements carried out on the property
OR
(ii) a final withholding tax equivalent to 12% of the sale price of the immovable property.
However, if the immovable property has been owned by the vendor for a period exceeding 5 years, then Capital Gains Tax is charged at a final withholding tax rate of 12% of the sale price of the property.
Capital gains tax is not charged when the property being transferred has been declared as the vendor’s own private residence for a minimum period of 3 consecutive years - immediately preceding the date of transfer and has been disposed of within 12 months of vacating the property.
Capital gains tax on the sale of the property acquired through inheritance (Causa Mortis) is charged at the rate of 12% on the excess of the transfer value over the acquisition value as declared in the deed of Causa Mortis. If the property was inherited before the 25th November 1992, the rate of tax will be equivalent to 7% of the transfer value.
In cases where Capital Gains may be due - provided it is not a case where the 12% is applicable - we may through the assistance of our Tax Consultants apply to the Commissioner of Inland Revenue for a reduction on the tax due. The submission of the relative tax return and a detailed account of all expenses incurred in the acquisition/sale of the property will be required.
