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What are the tax implications of our mom giving us our inheritance out of the sale of her property?

Capital gains tax and donations tax need to be considered.

My mother sold her property and wants to give me and my brother our inheritance (in advance) out of the sale of her property. The amount is R500 000. I want to pay it into my home loan. What will the tax implications be? Or is there a better investment or a way to save on tax? Thanks for your help.

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There are a few considerations for this type of transaction.

The first one is to ensure that your mom makes provision for any capital gains tax (CGT) implications on the sale of her property. If there is a CGT liability, she should leave this aside before paying any proceeds to you and your brother. The CGT liability is dependent on whether the property was her primary residence or a rental, for example. CGT is paid on the proceeds or profit made on the property at the time of the sale.

Here is a CGT calculator from our clever friends at TaxTim.

The next type of tax is donations tax. Your mom and any other taxpayer can donate R100 000 per year without incurring any form of donations tax. Once you exceed this R100 000 there is a 20% donations tax that will become payable by the person making the donation. In your case, your mom.

To reduce this tax liability, your mom can transfer the proceeds to you and your brother over a number of years, thereby using her R100 000 annual allowance over a period of time. Your mom can also donate to her spouse and he could then also make a R100 000 donation to you and your brother. I obviously don’t have the full picture here to know your family structure. Donations between spouses are free of any type of donations tax.

In terms of investing, we will need a lot more information on your portfolio to make a recommendation on investments that could be suitable for you. The usual considerations would be a tax-free savings account, a retirement annuity, exchange-traded funds, unit trusts as well as investing offshore.

You need to find a balance in your portfolio between settling debt and investing. Settling debt will be a win in terms of saving on interest, but you also need to consider your long-term investment plans and where you will generate income from one day.

I think a discussion with a qualified financial planner will assist you with your decision making.

This is a lot of money and wise decisions need to be made.

All the best.

Do you have any questions you would like answered by registered financial planners?



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Zero if your mother occasionally withdraws the cash to pay for your bills or uses her credit card to pay for your bills.

The only Tax implications is if your mother transfers R100K to your bank account then R100K comes off her bank account.

How difficult can that subtraction be?

She can lend you the money at zero or low interestand write off 100k a year

1. Tell you mother to declare the property as her primary residence therefore no tax implication from SARS (and SARS does not audit this even though they say they will)

2. Your mother pays you the funds directly and marks it as a loan to SARS if SARS asks. You can create any loan agreement between yourselves (even though technically you will never pay the money back. It will just be for proof if SARS had to ask)

There you go.. fully covered

Absolutely correct ; a wise dog!

She must write off the loan at 100k a year otherwise it remains an asset in her estate

All these strict check and balances from SARS, you have declare to SARS if you buy your kid a lollypop of R5 …

and then we all see on Y O U T U B E the documentary of the Zuma riches?

The Pakistani and Dubai bank accounts, the mansion in Dubai in the same high-end street as that of Robert Mugabe.

Is SARS blind like a bat? it could not even smell the cigarette smoke from the illegal cigarette factory in Johannesburg for over one year.

A factory boys, not some back street shop

Hi Craig Turton, thank you for the interesting article “What are the tax implications of our mom giving us our inheritance out of the sale of her property?”

Is the limit of R100 000, without donations tax also applicable to once spouse?

What if you take the money and buy a house cash with your mother?

i have read all the comments,
and it seem the best road to take,
is that your mother start a cigarette factory,
live their herself (primary residence),
with her children as directors,
and shares to be divided between family members,
including local politicians, sars, munisipality officials

End of comments.





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