Own name, company or trust? Owning rental property in South Africa

Most people who buy a second or third property start by asking whether it should be held differently from the first. There are four common answers, and each one is a different taxpayer in the eyes of SARS, with its own rates, its own exclusions and its own paperwork.

Your own name is the default. The title deed shows you (or you and a spouse or partner), the rent is part of your income, and a sale is your capital gain. A company is a separate legal person: the title deed shows the company, the company earns the rent and pays its own tax, and you own shares. A trust holds the property for its beneficiaries under a trust deed, run by trustees, and pays its own tax on what it keeps. A trust that owns a company adds a layer: the trust holds the shares, and the company holds the property.

None of these is a way to make property tax-free, and the sections below set out what each one actually changes. Where a rule has conditions or exceptions, the text says so, because the exceptions are often where a particular case is decided.

In your own name, the rent is added to your other income and taxed at your marginal rate. For 2026/27 the rates are 18% up to R245 100, 26% to R383 100, 31% to R530 200, 36% to R695 800, 39% to R887 000, 41% to R1 878 600 and 45% above that. A primary rebate of R17 820 means no tax is payable on income under R99 000 for a person under 65 (R153 250 for 65 and over). The first R23 800 a year of South African interest is exempt for a person under 65 (R34 500 from age 65).

A company pays income tax of 27% (for years ending 1 April 2026 to 31 March 2027). Small business corporation rates are not available when more than 20% of a company's income is investment income such as rent, and every shareholder must be a natural person, so a company that lives off rent pays the flat 27%.

A trust that keeps its income is taxed at a flat 45% (for the year to 28 February 2027). Special trusts are taxed like individuals. Under the conduit rule, if a trust vests income in a beneficiary in the same tax year, the beneficiary is taxed on it at their own rates, not the trust at 45%. Whether that suits a particular family depends on who the beneficiaries are, what they earn, and what the trust deed allows.

A sale is a capital gains tax event in every structure, but only part of the gain is taxed. An individual includes 40% of the gain in taxable income, which caps the tax at 18%. A company includes 80%, which gives 21.6%, and an ordinary trust includes 80% at a flat 45%, which gives 36%.

Individuals also get an annual capital gains exclusion of R50 000 and a R3 000 000 exclusion on the gain on their main home. Companies and ordinary trusts get neither. For a rental property that is not anyone's main home, the primary residence exclusion would not apply in any structure, so the practical difference is the lower inclusion rate and the annual exclusion that an individual keeps. The full mechanics are in the capital gains tax guide.

Selling the shares of a company, or an interest in a trust, instead of the property is its own set of rules. It is not a way round transfer duty or capital gains tax, because transfer duty can apply to shares in a company that holds residential property, and the CGT position depends on the facts.

Profit is taxed in a company at 27% first. When the company pays a dividend to an individual, dividends tax of 20% is withheld on top. Paying back money a shareholder lent the company is a repayment of capital, not income, so it is not taxed. A loan the other way, where the company lends to a shareholder at less than the official rate of interest, can create a deemed dividend.

Interest a company pays a shareholder is taxable income for the shareholder, after the interest exemption of R23 800 a year for people under 65.

In a trust, income that is kept is taxed in the trust at 45%, while income vested in a beneficiary in the same year is taxed in the beneficiary's hands. A trust that owns a company has both layers: the company's 27% on profit, and then the question of what happens to what the company pays up to the trust. The dividends tax rate of 20% is the rate for a dividend paid to an individual. What applies to a dividend paid to a trust is a question for a tax practitioner.

In your own name, a rental loss can normally be set off against your other income. Section 20A ring-fences it, meaning the loss can be used only against future profit from that same letting, when your taxable income before the loss is in the top tiers and the letting of residential property is a listed trade. Parliament's 2025 tax amendments set out to lower that threshold from 1 March 2026 to the start of the 39% bracket (taxable income above R695 800 in 2026/27); SARS's guide on ring-fencing has the current position.

Two exceptions can lift the ring-fence: at least 80% of the property being used by non-relatives for at least half the year, or a reasonable prospect of profit within a reasonable time. Neither is automatic, and both depend on the facts.

A loss made by a company or trust is not passed to its owners or beneficiaries. It is carried forward inside the company or trust against its own future income. Section 20A applies only to natural persons, so it does not arise in a company or trust, but neither does a loss there reduce anyone's personal tax.

A company and a trust are each a separate taxpayer. Each keeps its own accounts and submits its own tax returns, and the rent and the running costs of the property belong to that company or trust rather than to the person behind it. An individual owner does not carry that administration.

These are real, recurring costs. They are not a reason to choose or avoid a structure by themselves, but they belong in the comparison, together with the tax. What a bank will require before lending to a company or trust, and on what terms, is a question for the bank.

Moving a property you own into a company or trust you are connected to counts as a sale at market value for capital gains tax, even if nothing is paid. A company is connected to you if you hold 20% or more of it with voting control, and a trust is connected to its beneficiaries and its founder.

The new owner, here the company or trust, pays transfer duty on the property's value unless an exemption applies. For 2026/27 the first R1 210 000 is taxed at 0%, then 3%, 6%, 8%, 11% and 13% in bands up to R13 310 000, with the top rate above R13 310 000. Giving a home to a trust is also a donation, and donations tax is separate from transfer duty.

There is some relief for a company. Section 42 of the Income Tax Act can postpone the capital gains tax when a property is swapped for shares in a company, and section 9(1)(l) of the Transfer Duty Act can exempt the transfer duty in a qualifying deal. Both are technical and come with conditions; an attorney or tax practitioner can say whether either applies. A trust gets neither, because section 42 is for companies.

Moving a home in is therefore rarely free. The tax is triggered on the move itself, which is why the question is usually worked through before a deal rather than after.

If a person lends money to a trust and charges less than the official rate of interest, section 7C treats the interest forgone as a donation each year. That donation counts toward donations tax. The official rate is the repo rate plus 1 percentage point, which is 8.25% from 1 October 2026 (the repo rate is 7.25% from 25 September 2026). It moves whenever the repo rate does, so a figure quoted here is only true on the date given. There are exceptions, for example a loan used to buy a home that the lender or the lender's spouse lives in.

Donations tax is 20% on total donations since 1 March 2018 up to R30 million and 25% on the part above that, after a yearly exemption of R150 000 for a natural person.

Separately, the attribution rules in section 7 can tax income back in the hands of the person who gave the asset, instead of the person who received it. Income earned by a minor child, a spouse or a trust because of a donation is the usual example. These rules can apply, but each one has its own conditions and exceptions, so whether one applies depends on the facts.

Estate duty. Estate duty is 20% on the first R30 million of a dutiable estate and 25% above that. The first R3.5 million is deducted, and property left to a surviving spouse is also deducted. Assets owned by a trust are not part of a person's estate, but money the trust owes that person is an asset in their estate.

Creditors, succession and control. Who a creditor can reach, what happens to the property when an owner dies, and who controls it day to day are questions of law, and the answers turn on the exact documents: the trust deed, the shareholders' agreement, the will. They sit outside the tax rules above, and an attorney can say how they apply to a particular structure.

No structure is a general answer. Each one changes who is the taxpayer, which rate and exclusions apply, how money comes out, and what happens when the owner dies or the property is sold. The same property can cost more or less to hold in a structure depending on the owner's income, the bond, how long the property will be kept, and what the rules for that structure require.

This guide is general information, not advice. It does not tell anyone which structure to use and it does not take account of anyone's particular circumstances. A registered tax practitioner or financial adviser can advise on your own situation.