The sale of a house often can often lead to the sale of movable property between the parties. The most common instance of this is the sale of furniture items that are located on the property.
Here’s what you need to know.
Movable vs Immovable Property During a Property Sale
Movable property is anything which can be moved from place to place without damage to itself.
At the outset it is important to note that a fixture or a fitting (such as solar panels and an inverter linked to the DB Board) is deemed part of the immovable property by SARS, and it is correct to include it as part of the purchase price of the immovable property.
It is common practice that movables are included in the total purchase price of the immovable property, however, it’s important to note that if the value of the movable items is material, this may have a disadvantageous financial impact on both parties.
The Impact of Including Movables in the Property Purchase Price
Including movables in the purchase price of a property will inflate the purchase price of the immovable property which has the following outcomes:
- The purchaser will pay a higher transfer duty tax and conveyancing fee; &
- The seller may be liable for more capital gains tax.
In order to avoid these outcomes, it is best that the parties create a separate sale of movables agreement.
A sale of movables agreement is a relatively simple agreement that outlines additional terms and is linked to the sale for the immovable property.
Should you require assistance in drafting this agreement, please contact us and we can assist in compiling this for you.