If you’re a South African living and working abroad, there’s a good chance you still own property back home that you probably rent out in your absence. Even if it’s just to cover costs, or your properties are occupied by friends and family, it is considered as South African assets and thus subject to taxation. What happens to your properties if you decide to formalise your emigration from South Africa? If you’ve been investigating financial emigration, you might have read that a result of the process of financial emigration is that you are deemed to have disposed of your South African assets the day before you’ve left the country. What does this mean for you, and what should you do to retain ownership of your South African properties when deciding to make the move to financially emigrate to your new country?
Let’s ask the question again: Can I financially emigrate from South Africa if I still own property there?
Long story short, the answer to this head-scratcher is yes. Even though you may have completed the process of financial emigration, you’re still eligible to hold a bank account and other assets like a house back in South Africa. The financial emigration process does not change property ownership – you can keep properties and the normal tax rules apply on rental profits and capital gains when you sell them.
The Currency and Exchanges Manual for Authorised Dealers states that private individuals qualify for a number of facilities after they’ve emigrated to any country that lies outside the Common Monetary Area, once all their assets have been brought under the administration of an Authorised Dealer (i.e. a commercial bank in SA). This implies that South Africans can still own assets back home.
Elsewhere in the Manual it reads that any cash balances left over after the relevant facilities have been granted and all capital payments that become due to the emigrant, as well as the total proceeds of any asset sold thereafter must be deposited into an emigrant’s capital account, such as a current, savings or interest-bearing deposit account with an Authorised Dealer. What does this mean? It’s basically another way of saying that you’re free to do anything with your assets in South Africa, as long as the money doesn’t leave South Africa and it stays under the watchful eye of an Authorised Dealer.
What happens to my property after I financially emigrate from South Africa?
You can still keep any immovable property that you own in South Africa, but the original title deed will have to be brought under the control of the Authorised Dealer, who handled your financial emigration. If your property is later sold, the proceeds from the sale must be paid into your emigrant’s account. The proceeds thereof may then be transferred abroad as part of your annual foreign capital allowance of R10 million.
Things to know about the financial emigration process, if you’re a property owner:
- You must nominate an Authorised Dealer to handle your financial emigration.
- If you own a property in South Africa the original title deed of the property will need to be handed over to the bank that handled your financial emigration.
- If you have a bond on your South African property, or other liabilities against your property, the bank that you use for financial emigration will need to be satisfied that your liabilities in South Africa are adequately secured. This means you need to ensure that the Authorised Dealer you use is satisfied that you are able to meet your obligations, or they will not be able to process your financial emigration.
- Income such as interest and rental on fixed property may continue to be earned after the financial emigration process, however, such funds must be verified by means of supporting documents, such as rental agreements.
What other reasons would there be for me to financially emigrate from South Africa?
You might want to keep your immovable properties back home while you’re working abroad, but what do you do if you need money? You can’t touch your retirement annuity savings…or can you? Financial emigration is one of the handful of exceptions to the rule that your retirement annuities cannot be touched before the official retirement age of 55.
Once you’ve completed the financial emigration process with the South African Reserve Bank, you are then free to make an application to cash in your retirement annuity and transfer the post-tax proceeds abroad. Best of all, the money that comes from your retirement annuity is yours to do with as you please – you’re not obliged to put it into another pension or retirement facility abroad, it’s yours! You can travel the world, pay for an education, build a home or spend it all on buying ponies – it’s your choice!
Quick refresher: What is financial emigration?
Financial emigration is the official process that changes your status to a non-resident for tax and exchange control purposes in South Africa. Done through the South African Revenue Service (SARS) and the South African Reserve Bank (SARB), this formal process ensures that you meet all the requirements of the Income Tax Act in order to be reclassified from resident to non-resident. It does not affect your South African citizenship, your right to a South African passport, nor does it affect your ability to own property in South Africa.
FinGlobal: Your financial emigration specialists
Offering a full suite of financial services for South Africans, choosing FinGlobal means optimal payouts within a shorter timeframe, and at better exchange rates than commercial banks. You’ll also be assured of:
- Speed: You’ll have your money faster, no upfront payment required.
- Compliance: we’re a licensed financial services provider and SARB approved foreign exchange intermediary.
- Convenience: Our services are delivered remotely, and we take care of the whole process, providing you with signature-ready, completed documentation.
FinGlobal is ready to assist you with financial emigration from South Africa or with accessing and transferring your retirement funds anywhere in the world. If you’re interested in our services or would like more information, just leave us your details so we can be in touch!