Taking payment in an offshore account

[Basment Dweller]

A client of mine wants to buy one of my properties but he wants to pay in US dollars into one of my offshore accounts...he wants to find a use for these dollars that are sitting in a bank account overseas earning 1% interest.

Can I sell the property to him at half price in Rands and take the rest of the payment overseas?

There isn't much for me to gain by doing this but this guy has helped me in the past and I'd like to do what I can. Obviously I would like everything to be above board before doing a deal like this so I was just wondering what your thoughts are on the legalities. Will SARS step in to wonder why the property was sold at such a low price?

[Houses4Rent]

I have no experience with this, but I am sure SARS will ask some serious questions, unless you pay transfer duty on the full normal ZAR amount. Just ask Sars and your conveyancer and accountant.

On the on other side what good are the $ for you or are you getting more than 1%?

The Rand is quite weak right now. What stops the buyer to convert his Dollar into Rands then then pay you?

[Basment Dweller]

There are tax savings, I declare less tax in this country whereas somewhere else in the world a completely unrelated transaction takes place.

[Justloadit]

I stand to be corrected, but all income must be declared, home and foreign.

The theory goes that you are using the local infrastructure to make gains, irrespective of where the gains accumulate.

[Houses4Rent]

I also thought that RSA has a residence based system where a resident had to declare any global income in the world. Where all do that is a different discussion altogether. But I do hear that more and more international agreements get signed to exchange info between countries.

[Basment Dweller]

How do they trace these things, how will they know?

[Justloadit]

How do they trace these things, how will they know?

In your case, because it is fixed property, part of the deed of sale states how the property is being paid.
You may not declare the foreign portion, however and state the sale was made at the local paid amount. What will transpire as far as the buyer is concerned, the property value is low, and the day that it is sold, the CGT will be the difference of the local amount against the latest sale amount, which means that a larger amount of supposedly profit was made, and the tax is calculated on this difference amount. Effectively it simply means your friend is going to pay more tax on the property the day he sells it.

[Basment Dweller]

In your case, because it is fixed property, part of the deed of sale states how the property is being paid.
You may not declare the foreign portion, however and state the sale was made at the local paid amount. What will transpire as far as the buyer is concerned, the property value is low, and the day that it is sold, the CGT will be the difference of the local amount against the latest sale amount, which means that a larger amount of supposedly profit was made, and the tax is calculated on this difference amount. Effectively it simply means your friend is going to pay more tax on the property the day he sells it.

Ok what if you just sell it at a loss or break even and don't declare a profit but still take a payment in another country?

[Justloadit]

As long as the conveyancer is happy.....their fee is based on the registered sale price.