---
title: "Rental property portfolio in South Africa: own name, company or trust?"
description: "Several rentals in South Africa: own name, company or trust? Worked tax examples, section 7C and 20A, and what moving homes in costs."
url: "https://privately.co.za/guides/property-portfolio-company-or-trust"
country: "South Africa"
updated: "2026-10-09"
published: "2026-10-09"
author: "Chandre Niemand"
source: "Privately"
---

# Rental property portfolio in South Africa: own name, company or trust?

*Chandre Niemand, Founder, Privately. Published: 2026-10-09.*

## Summary

No owner is cheapest for every South African rental portfolio. Selling favours your own name, but a trust vesting income and gains in adult resident children beat it in 22 of 36 sold cases, mostly at 41% and 45%, and that money then belongs to the children. A company tends to suit a high-rate owner of low-growth homes who leaves profit inside. At death, a trust tends to do best when it hands its income out; one that keeps it was usually behind your own name. This guide is general information, not advice. A registered tax practitioner or financial adviser can advise on your own situation.

## What decides the answer

Anyone can hold rentals in their own name, in a company, in a trust, or in a company that a trust owns. A handful of facts about the owner and the homes decide which costs least, not the number of homes.

- **Growth or income.** A company's 27% only helps on profit that stays inside it. A gain costs 37.28% in all in a company, against at most 18% in your own name, so homes that earn more in rent than they grow suit a company better.
- **Selling in your lifetime or keeping until death.** Sold in your lifetime, your own name left more than a company or a trust that keeps its income in every research case. A trust that vested income and gains in adult resident children left more in 22 of 36, and that money then belongs to the children. Kept until death, a genuine trust's homes stay outside your estate, which helps most when the trust hands its income and gains out. A trust that keeps its income pays 45% on it, and in the research it was behind your own name at death in 30 of 36 cases.
- **Your tax rate, and whether you will draw the profit.** Profit paid out of a company costs 41.6% in all: more than a 31% or 41% owner pays in their own name, less than a 45% owner does.
- **Who ends up with the money, and early losses.** A trust can pass income and gains to adult resident beneficiaries on lower rates in the same tax year, but income passed to a minor child because of a parent's donation is taxed in the parent's hands. A rental loss in your own name lowers the tax on your other income unless section 20A ring-fences it; in a company or trust it stays inside.
- **Size.** Running costs are roughly fixed per company or trust, so they weigh most on a small portfolio. Section 7C treats interest not charged on a loan to a trust as a yearly donation whatever the size. Donations tax starts only above about R1 866 000 of loan from one lender, on the R150 000 exemption SARS applies, if that lender makes no other donations that year (R1 244 000 under the Act's R100 000).
- **Your estate, homes you already own, and the bank.** Estate duty is 20% above a R3 500 000 abatement (25% above R30 000 000), and a surviving spouse can use the unused abatement, so R7 000 000 for a couple. Moving a home into a company or trust is a sale at market value; a home the company or trust buys itself is not. Banks usually ask for personal surety whatever the structure.

## Find your situation: when each owner tends to make sense, and when not

The table matches common situations to the owner that the rules tend to favour, and says why. It states facts about the rules, not a recommendation for any one reader, and the exceptions often decide a particular case.

**Which owner tends to fit which situation, and why**

| Your situation | What tends to fit | Why |
| --- | --- | --- |
| One or two homes, bought with a bond, and a salary | Your own name | No yearly cost of running a company or trust. A rental loss can lower the tax on your salary unless section 20A ring-fences it, and a gain costs 18% at most, after a R50 000 exclusion. |
| Several homes, and you may sell some in your lifetime | Your own name, unless adult resident children are to receive the income and gains through a trust | In the research your own name left more than a company, a trust that keeps its income and a trust that hands it to you in all 36 sold cases. A trust that vested income and gains in two adult resident children beat it in 22 of them (10 of 12 at 41%, 11 of 12 at 45%, 1 of 12 at 31%), but that money then belongs to the children, and section 7(3) taxes income vested in a minor child because of a parent's donation in the parent's hands. Selling over several tax years can lower the tax. |
| A couple who each fund half of the homes | Each spouse in their own name | Two taxpayers: two R50 000 yearly exclusions, two sets of brackets and two R150 000 donations exemptions. It works only if each genuinely funds their half. |
| A small portfolio, one or two homes | Your own name | The cost of running a company or trust is roughly fixed: accountants quote R12 000 to R35 000 a year for a small property company, and the tax saved on a small profit can be less. |
| A 41% or 45% owner with homes that earn more in rent than they grow, little or no bond, and profit left inside for years | A company | 27% on profit that stays inside, instead of 41% or 45%. For each R100 000 of profit kept inside, it stops winning once its yearly running cost passes about R19 200 (41%) or R24 700 (45%), and those costs scale with the profit. In the research it led only where the homes grew little. |
| Typical homes that grow in value and carry a bond | A company tends not to fit | A gain costs 37.28% in all in a company against 18% at most in your own name. With 5% growth and a 50% bond your own name was ahead in all 36 sold cases, even for a 45% owner who left the profit in the company for 20 years, and at death the company was behind in all 36. |
| A large estate kept until death, adult South African children on lower rates, and an independent trustee | A trust that hands its income and gains out | Its homes stay outside your estate, so estate duty, the executor's fee and capital gains tax at death do not fall on their growth. In the research a trust that handed income to you or to two adult children beat your own name in all 36 death cases. |
| You want to keep the income, or keep control of the trust | A trust tends not to fit | A trust that keeps its income pays 45% on it, and in the research it was behind your own name at death in 30 of 36 cases. Income handed back to the founder is taxed at the founder's rate, and control for your own benefit can bring a trust's assets back into your estate (section 3(3)(d)). |
| You run a business and want your homes kept from its creditors | A genuine trust can help | Homes in your own name are open to your creditors. A trust protects them only if it is genuinely run and is not your alter ego, and a bank may still ask for your personal surety. |
| A group that needs a company for operating, financing or limited-liability reasons and a trust for succession | A trust that owns a company | It adds 20% dividends tax on everything paid up to the trust, with no income splitting on dividends, the costs of both, and no owner-managed exemption from independent review. For plain residential rentals it tends not to fit. |
| Homes you already own | Moving them counts as a sale | Capital gains tax now, transfer duty, fees and a new bond: R339 237 for one home in the example. Section 42 can defer the tax for a company, but not for a trust. |
| Homes you are about to buy | A company or trust can buy them itself | Nothing is moved, so no capital gains tax arises on a move. A loan to a trust is within section 7C, and banks often ask for your surety. |
| The home you live in | Your own name | A company or an ordinary trust gets no R3 000 000 home exclusion. See the section on the home you live in. |

## How each owner is taxed

2026/27 figures as SARS applies them; the Rates Bill that enacts them was before Parliament in October 2026. Every figure in this guide is a 2026/27 figure. In the tables, Trust keeps is a trust that keeps its income and gains, Trust hands out is a trust that hands them out to you, and Trust + company is a trust that owns a company.

In your own name, rent profit is added to your other income and taxed at your marginal rate: 18% up to R245 100, 26% up to R383 100, 31% up to R530 200, 36% up to R695 800, 39% up to R887 000, 41% up to R1 878 600 and 45% above R1 878 600. A person under 65 pays no tax on income under R99 000 (the R17 820 rebate) and the first R23 800 of interest is exempt. A company or trust gets neither.

A company pays a flat 27%. Small business corporation rates and turnover tax are not open to a rental company: more than 20% of its income is investment income, which includes rent.

A trust that keeps its income pays a flat 45%. Income vested in a beneficiary in the same tax year is taxed in the beneficiary's hands instead, at their own rates. That rule is subject to the attribution rules in section 7(2) to (8), and from 1 March 2026 it works for a resident trust only for a resident beneficiary (section 25B, as amended by the Taxation Laws Amendment Act 5 of 2026).

Only part of a capital gain is taxed: 40% for an individual and 80% for a company or an ordinary trust, so at most 18%, 21.6% and 36%. The R50 000 yearly exclusion (R440 000 in the year of death) and the R3 000 000 home exclusion are for natural persons and special trusts only, and a let home is not anyone's primary residence. In your own name a large gain in one tax year can reach a higher bracket.

**How income and gains are taxed, owner by owner (2026/27)**

|  | Own name | Company | Trust | Trust that owns a company |
| --- | --- | --- | --- | --- |
| Tax on rent profit | Your own rates, 18% to 45% | 27% flat | 45% flat on income it keeps. Income vested in a resident beneficiary in the same tax year is taxed at the beneficiary's rates | 27% in the company |
| Taking the profit out | Nothing more to pay | Repaying money you lent it is tax free. The rest is a dividend taxed at 20%, so 41.6% in all | Capital paid out is tax free after the trust's own tax | 20% dividends tax on what the company pays up to the trust, which is not an exempt shareholder |
| Tax on a gain when sold | 40% of the gain is taxed, so 18% at most, after the R50 000 exclusion | 80% is taxed, so 21.6%, then 20% dividends tax on the rest paid out above your loan (37.28% in all) | 80% is taxed, so 36%, if the trust keeps the gain. A gain vested in a resident beneficiary the same year is taxed in their hands | 21.6% in the company, then 20% dividends tax on the way up to the trust |
| R50 000 yearly and R3 000 000 home exclusions | Yes (the home exclusion only on a home you live in) | No | No (special trusts only) | No |
| A rental loss | Set against your other income, unless section 20A ring-fences it | Stays in the company, carried forward against its own income | Stays in the trust. If income was vested it can only reduce that beneficiary's later income from the trust | Stays in the company |

## Running costs and loans, owner by owner

A genuine shareholder loan can be repaid to the shareholder tax free: it is a return of capital, not a dividend, and only interest on it is taxable. The examples therefore treat every rand you put in (the deposit, transfer duty, fees, yearly shortfalls) as a loan from you to the company or trust, repaid to you first when it pays out.

**Running costs and loans from you, owner by owner**

|  | Own name | Company | Trust | Trust that owns a company |
| --- | --- | --- | --- | --- |
| Running costs | None beyond your own tax return | Accounts, tax returns, CIPC annual returns and the beneficial ownership filing | Registration with the Master, Letters of Authority, a register of beneficial owners, yearly returns and accounts, and usually an independent trustee | Both sets, plus an independent review of the company, because a company whose shareholder is a trust cannot use the owner-managed exemption |
| A loan from you to it | Not applicable | Not covered by section 7C. Repaid to you tax free | Section 7C: interest not charged at the official rate is a yearly donation | Section 7C applies when a connected trust holds at least 20% of the company's shares |

## What about the home you live in?

Many searches for "should I buy property in a trust" are about a home to live in. The rent examples in this guide do not apply to a home you live in yourself, and the differences that tend to matter are these.

- **The home exclusion.** The first R3 000 000 of the gain on your main home is excluded from capital gains tax, but only for a natural person or a special trust. A company or an ordinary trust gets none, so a gain on the home is taxed there at 21.6% in a company or 36% in an ordinary trust, before any dividends tax or payout.
- **Moving the home you live in.** A move out of your own name is still a disposal at market value, with transfer duty, fees and a new bond. The exclusion can reduce the tax on the move itself, but the home does not keep it for later growth once a company or an ordinary trust owns it. The window to move a home out of a company or trust to the person living in it closed on 31 December 2012.
- **A loan to a trust.** Section 7C excludes, for example, a loan used to fund a home that the lender or the lender's spouse lives in.
- **Reasons that are not about tax.** Creditor protection and succession are the reasons people most often give for a trust. They turn on the trust deed, the will and the facts, and an attorney can say how they apply.

## A year of rent: the same profit taxed five ways

Take one home bought for R2 000 000 with a R400 000 bond at prime, 10.75%. It lets for R180 000 a year. Rates, levies, insurance and repairs cost R37 000 and the bond interest is R43 000, which leaves R100 000 of profit before the cost of running a company or trust.

The table shows each owner's tax on that profit and what is left after tax and the cost of running the owner. The rate columns are an owner with a salary of R400 000, R1 000 000 and R2 000 000, which put the extra R100 000 at 31%, 41% and 45%; only your own name and a trust that hands its income out change with the rate. These examples run on the tax engine behind Counter That, Privately's free property game, which assumes running costs of R9 000 a year for a company, R18 000 for a trust and R27 000 for a trust that owns a company (of which the company deducts R9 000). Inside a company or trust, what is left has not yet been paid out.

Read the company row with its running cost in mind. The game's R9 000 is below the R12 000 to R35 000 a year that accountants quote for a small property company's accounts and tax (a market range, not a tariff), so that row flatters the company. At R12 000 a year the company leaves R64 240, at R23 500 (the middle of the range) R55 845 and at R35 000 R47 450, against R59 000 for a 41% owner and R55 000 for a 45% owner. The company stays ahead of a 41% owner only while it costs less than about R19 200 a year to run, and of a 45% owner only below about R24 700. Both figures are for the R100 000 of profit kept in the company, and they scale with the profit while the owner's rate on it stays the same: more profit raises them, less lowers them. At the game's cost it is already behind a 31% owner.

**Tax and what is left (tax / left) on R100 000 of rent profit in one year (2026/27)**

| Owner | Running cost | 31% owner | 41% owner | 45% owner |
| --- | --- | --- | --- | --- |
| Own name | None | R31 000 / R69 000 | R41 000 / R59 000 | R45 000 / R55 000 |
| Company | R9 000 a year | R24 570 / R66 430 | R24 570 / R66 430 | R24 570 / R66 430 |
| Trust keeps | R18 000 a year | R36 900 / R45 100 | R36 900 / R45 100 | R36 900 / R45 100 |
| Trust hands out | R18 000 a year | R25 420 / R56 580 | R33 620 / R48 380 | R36 900 / R45 100 |
| Trust + company | R27 000 a year | R24 570 / R48 430 | R24 570 / R48 430 | R24 570 / R48 430 |

## Profit left inside for years

The company's lower rate matters when profit stays inside it. This table takes R100 of pre-tax profit used to pay down a bond that charges prime (10.75%). It is taxed each year at the owner's rate or the company's 27%, and taken out at the end, when a company pays 20% dividends tax (the first rand it pays out repays any loan you made, tax free). Running costs are left out.

Left for ten years, the company's R124 beat a 41% owner's R109 and a 45% owner's R98, and trailed a 31% owner's R141. At twenty years the order is the same. Paid out straight away it trails the 31% and 41% owners and is ahead of the 45% owner's R55. A trust that keeps its income pays 45%, so it matches a 45% owner.

On R100 000 of profit a year the company's tax bill is R6 430 lower than a 31% owner's, R16 430 lower than a 41% owner's and R20 430 lower than a 45% owner's, before the cost of running it. This table counts profit only. The next section adds what the homes do while the profit sits inside.

**What R100 of pre-tax profit becomes if it pays down a prime-rate bond and is then taken out**

| Owner | Taken out now | After 10 years | After 20 years |
| --- | --- | --- | --- |
| Own name, 31% | R69 | R141 | R289 |
| Own name, 41% | R59 | R109 | R202 |
| Own name, 45% | R55 | R98 | R174 |
| Company (27%, then 20%) | R58 | R124 | R265 |
| Trust keeps (45%) | R55 | R98 | R174 |

## When a company beats your own name, and when it does not

A real rental also grows in value, and growth is taxed more heavily in a company: 21.6% when the company sells and 20% dividends tax when the money comes out (37.28% in all), against at most 18% in your own name. The research model behind Counter That ran four homes for a 45% owner who leaves the profit inside the structure for 20 years and then sells, at different growth rates, with no bond and with a bond of half the price. The table is the total cash that reaches the family in future rand, with running costs and tax counted.

At 5% growth a year with a 50% bond, your own name was ahead in all 36 sold cases the research ran (two, four and eight homes, three tax rates, 10 and 20 years, cash drawn or kept), including this one: R16.23m against R14.59m. The company led only where the homes grew little. With no bond it led at up to 3% growth and trailed at 5%. With a 50% bond it led at 0% growth and trailed from 2%.

**Four homes, a 45% owner, profit left in the structure for 20 years, then sold: total cash to the family (R million, future rand). The larger of each pair is bold**

| Growth a year | No bond: own name | No bond: company | 50% bond: own name | 50% bond: company |
| --- | --- | --- | --- | --- |
| 0% | R15.60m | **R16.81m** | R8.07m | **R8.37m** |
| 2% | R18.01m | **R18.63m** | **R10.49m** | R10.19m |
| 3% | R19.58m | **R19.84m** | **R12.06m** | R11.40m |
| 5% | **R23.75m** | R23.03m | **R16.23m** | R14.59m |

## If you sell in your lifetime

Take four homes bought in one tax year for R2 000 000 each, each with a R1 000 000 bond, now worth R3 000 000 each. All four are sold in one tax year through an agent at the bottom of the usual range (5% plus 15% VAT, R172 500 a home) and the money is paid out. The owner earns R1 000 000. After the bonds and selling costs the sale leaves R7 310 000 before tax. The gain is R749 518 a home after a base cost of R2 077 982 (including R33 786 of transfer duty), R2 998 072 in all.

In your own name the R495 509 is 16.5% of the gain. A company or a trust that keeps its gain pays about R0.6 million more: 80% of the gain is taxed at 27% or 45%, there is no R50 000 exclusion, and a company then pays dividends tax on the rest. A trust that hands the gain out to you is taxed at your rates, the same as your own name, and only adds running costs. A trust that owns a company comes out the same as a company. The research also counts years of holding. In all 36 sold cases it found your own name ahead of a company, a trust that keeps its gain, a trust that hands it to you and a trust that owns a company.

One owner beat your own name: a trust that vested its income and gains in two adult resident children, who each earn R250 000 and are taxed at their own lower rates. It was ahead in 22 of the 36 sold cases: 10 of 12 for a 41% owner, 11 of 12 for a 45% owner and 1 of 12 for a 31% owner. The saving is the children's lower rates, and the money then belongs to the children, not to you. Section 7(3) taxes income vested in a minor child because of a parent's donation in the parent's hands, so the saving is for adult children.

Selling all four in one tax year pushes the gain through the higher brackets: selling one a year over 4 tax years cuts the tax in your own name from R495 509 to R458 884. The salary barely moves these results: from R450 000 to R2 500 000 your own name keeps between R6 779 347 and R6 846 640, and the order of the owners does not change.

**Four homes sold in one tax year at R3 000 000 each (R7 310 000 before tax)**

| Owner | Tax on the sale | Tax on paying it out | Total tax | You keep |
| --- | --- | --- | --- | --- |
| Own name | R495 509 | R0 | R495 509 | R6 814 491 |
| Company | R647 584 | R444 646 | R1 092 230 | R6 217 770 |
| Trust keeps | R1 079 306 | R0 | R1 079 306 | R6 230 694 |
| Trust hands out | R495 509 | R0 | R495 509 | R6 814 491 |
| Trust + company | R647 584 | R444 646 | R1 092 230 | R6 217 770 |

## If you keep the homes until you die

Now take the same four homes, kept until death, as one moment with no years of holding. The heirs are two adult South African children, each in the 31% bracket, who sell everything after inheriting at the same selling costs for every owner. The executor's fee is the prescribed tariff of 3.5% of gross asset value plus VAT, often agreed lower. Estate duty is 20% on the estate after its debts and the fee, above the R3 500 000 abatement. The trust is assumed to be genuine with an independent trustee: if you control it for your own benefit, section 3(3)(d) of the Estate Duty Act can bring its assets back into your estate.

In your own name the homes are deemed sold at death (section 9HA), with a R440 000 exclusion in the year of death, and the heirs take them at market value because capital gains tax is charged at death. In a trust only your loan to it is in the estate, at face value, and the trust sells and passes the gains to the heirs at their rates; its homes keep their original base cost. A company's shares are valued at net asset value, and the company still owes its own capital gains tax and dividends tax when the homes are sold.

On that one-moment basis a trust that passes the gains to the heirs left them R960 193 more than your own name, a trust that owns a company R302 998 more, and a company R945 091 less. Without the executor's fee the order is the same, and a salary from R450 000 to R2 500 000 moves your own name's figure by R57 674 at most.

Those trust rows flatter the trust, because the table counts none of its yearly costs. A trust that keeps its income pays 45% on it, and running it costs R18 000 a year in the game's assumption (R27 000 for a trust that owns a company). Section 7C treats the interest not charged on your R4 439 184 loan to the trust, or to a company it owns, as R356 929 a year of donations, which is R41 386 a year of donations tax above the R150 000 exemption. The next section adds these costs, and with them a trust that kept its income was behind your own name at death in 30 of the 36 research cases.

On the company row, the heirs who liquidate the company are left with a capital loss of about the value of the shares (paragraph 35(3)(a); paragraph 19 does not apply to a dividend subject to dividends tax). The example does not count it, because it gives the heirs no other gains to set it against, so heirs with gains of their own would do better than that row shows.

If everything is left to a spouse who is a South African resident, there is no capital gains tax at the first death (section 9HA(2)) and no estate duty (section 4(q)), and the unused abatement passes to the survivor, so R7 000 000 at the second death. This table does not vest any income or gains in the heirs during your life. The research below does, in its Trust to children column, and there a trust that hands its income out beat your own name at death in all 36 cases.

**The same four homes kept until death, one moment with no years of holding (R12 000 000 of gross assets in your own name)**

| Owner | Executor's fee | CGT at death | Estate duty | Heirs' tax when they sell | Heirs receive |
| --- | --- | --- | --- | --- | --- |
| Own name | R483 000 | R549 509 | R693 498 | R0 | R5 583 993 |
| Company | R322 000 | R526 585 | R730 283 | R1 092 230 | R4 638 902 |
| Trust, gains to the heirs | R178 677 | R0 | R152 101 | R435 036 | R6 544 186 |
| Trust + company | R178 677 | R0 | R152 101 | R1 092 230 | R5 886 991 |

## After years of holding: what the research found

The research behind Counter That ran the whole story. Four homes cost R1 500 000 each, half on a bond at prime (10.75%, 20 years), and each lets for 8.5% of its price a year with 25% of the rent spent on costs. Rent and values grow 5% a year, and brackets and running costs rise 5% a year. The owner earns R450 000, R1 200 000 or R2 500 000 (the 31%, 41% and 45% bands) and draws the after-tax cash each year. Running costs are R20 000 a year for a company, R25 000 for a trust and R32 000 for a trust that owns a company. The owner lends the equity interest-free, with section 7C counted at 8.25% for a trust.

After 10 or 20 years the owner dies and the heirs sell and take the cash out. The executor's fee is the tariff plus VAT, estate duty is 20% (25% above R30 000 000) and the R3 500 000 abatement is assumed used up by other assets. Trust to children hands income and gains to two adult children who each earn R250 000. The table adds the cash drawn over the years to what the heirs receive, in future rand, so it is far larger than the one-moment figures above. These are model results under stated assumptions, not forecasts.

A trust that handed its income out beat your own name at death in all 36 research cases, to you or to two adult children. A trust that kept its income was behind in 30, level in 2 and ahead in 4, every one of them a 45% owner after 20 years. A trust that owns a company was behind in 32 of the 36, and a company in all of them. The research gives the reason for the trust that keeps its income: the 45% and 36% rates it pays on what it keeps eat most of the estate-duty saving.

**Four homes held 10 or 20 years, then the owner dies and the heirs sell: total cash to the family (R million, future rand)**

| Rate, years | Own name | Company | Trust keeps | Trust to you | Trust to children |
| --- | --- | --- | --- | --- | --- |
| 31%, 10 years | R5.83m | R4.03m | R5.41m | R6.47m | R6.58m |
| 31%, 20 years | R13.47m | R8.04m | R12.65m | R15.31m | R15.92m |
| 41%, 10 years | R5.65m | R3.99m | R5.41m | R6.34m | R6.58m |
| 41%, 20 years | R12.87m | R7.94m | R12.65m | R14.82m | R15.92m |
| 45%, 10 years | R5.54m | R3.95m | R5.41m | R6.27m | R6.58m |
| 45%, 20 years | R12.48m | R7.88m | R12.65m | R14.52m | R15.92m |

## Moving homes you already own into a company or trust

Moving a home you own into a company or trust you are connected to is a disposal at market value under paragraph 38 of the Eighth Schedule, even if nothing is paid. A trust you benefit from, and a company you hold at least 20% of (alone or with a connected trust), are connected to you. You pay capital gains tax now, at your rates. The new owner pays transfer duty on the market value and the conveyancing and Deeds Office fees, the old bond is cancelled (with a penalty without 90 days' notice) and a new one is registered, usually with your surety. The price becomes a loan account owed to you.

The example moves one let home bought for R2 000 000, now worth R3 000 000, with a R1 000 000 bond, for an owner earning R1 000 000. A company, a trust and a trust that owns a company cost the same to move into. Transfer duty on R3 000 000 is R107 356 (2026/27: 0% up to R1 210 000, then 3%, 6%, 8%, 11% and 13% in bands, the top rate above R13 310 000). Cancelling the old bond costs extra.

Section 42 of the Income Tax Act, with section 9(1)(l) of the Transfer Duty Act, can defer the capital gains tax and exempt the transfer duty when a home is swapped for shares in a company. The conditions are strict and a tax practitioner checks them.

Under section 42 itself the person must hold a qualifying interest in the company. That means at least 10% of a private company's equity shares and voting rights, or full-time work in its service business. The relief can be undone if the interest is given up within 18 months (section 42(7)). SARS's 2026 draft interpretation note gives its reading of when a person holds a qualifying interest. The gain is deferred, not removed: the company takes over your base cost, so the whole gain is later taxed in it at 21.6% and again as a dividend. There is no rollover into a trust.

A capital loss on a move into your own company or trust cannot be used against your other gains (paragraph 39); it can only be set against gains on other homes you move into the same structure. If the new owner is a trust, or a company a trust owns, the R2 196 226 loan account is also within section 7C: R176 586 a year of interest not charged, which is R5 317 a year of donations tax in 2026/27 if you make no other donations.

**What moving one R3 000 000 home into a company, a trust or a trust that owns a company costs**

|  | Amount |
| --- | --- |
| The gain on the move (market value less base cost) | R922 018 |
| Capital gains tax in your hands now (40% of the gain after the R50 000 exclusion) | R143 011 |
| Transfer duty, paid by the new owner on R3 000 000 | R107 356 |
| Transfer attorney and Deeds Office fees | R57 056 |
| Registering the new bond | R31 814 |
| Tax, duty and fees to move one home | R339 237 |
| Loan account the move creates, owed to you | R2 196 226 |

## Section 7C: an interest-free loan to a trust

If you lend money to a trust, or to a company in which a connected trust holds at least 20% of the shares, and charge less than the official rate of interest, section 7C treats the interest not charged as a donation each year. The official rate is the repo rate plus 1 percentage point: 7.75% to 31 May 2026, 8% from 1 June and 8.25% from 1 October 2026, which averages 8.04% for 2026/27 if the repo rate holds to February 2027. The law charges the official rate on the amount owing through the year and treats the donation as made on the last day of the trust's year. The examples use the loan's average balance for the year, a simplification.

Section 7C deems a donation on any such loan, but donations tax is charged only above the yearly exemption. Donations tax is 20% (25% above R30 000 000 of cumulative donations) after a yearly exemption of R150 000 per person, the amount SARS applies from 1 March 2026. The 2026 Rates Bill that enacts it was before Parliament in October 2026, and the Act still reads R100 000. On that basis a loan of up to about R1 866 000 from one lender creates no donations tax in 2026/27 if that lender makes no other donations that year. A couple who each lend half can lend about R3 731 000, and the Act's R100 000 would give about R1 244 000. Each further R1 000 000 of loan costs R16 081 a year in 2026/27, and R16 500 from 2027/28 if 8.25% holds.

Section 7C applies to amounts owed from 1 March 2017 for a trust and 19 July 2017 for a company a trust owns. It does not apply to your own company, and it excludes, for example, a loan used to fund a home that the lender or the lender's spouse lives in. Separately, section 7(5) and paragraph 70 can tax income or gains a loan-funded trust keeps in the lender's hands, up to the interest not charged; how that overlaps with section 7C is unresolved.

**Section 7C donations tax on an interest-free loan to a trust in 2026/27 (official rate 8.04%)**

| Loan to the trust | Interest not charged a year | Donations tax a year | If a couple each lend half |
| --- | --- | --- | --- |
| R1 000 000 | R80 404 | R0 | R0 |
| R3 000 000 | R241 212 | R18 242 | R0 |
| R6 000 000 | R482 425 | R66 485 | R36 485 |

## Section 20A: when a rental loss is ring-fenced

Section 20A can stop a natural person setting a loss from a trade, such as letting, off against other income. The loss is not lost: it is carried forward against later profit from the same trade. A company or trust is outside section 20A, but its loss never reaches anyone's salary anyway.

From 1 March 2026 (section 19 of the Taxation Laws Amendment Act 5 of 2026) the section applies only where taxable income, before setting off the loss, is R695 801 or more, which is where the 39% rate starts. Even then it needs one more thing.

- The trade made a loss in at least 3 of the last 5 years of assessment, this one included, or
- the trade is a listed suspect trade. Letting residential accommodation is listed unless at least 80% of the accommodation is used by people who are not relatives for at least half the year, so a normal long-term let to unrelated tenants is not a listed trade.
- Even then, the escape in section 20A(3) applies to a business with a reasonable prospect of taxable income within a reasonable period. For a listed trade (other than farming) it is lost after losses in 6 of the last 10 years.
- A ring-fenced balance can later be set against the taxable capital gain on a disposal after the letting has ended (section 20A(6)(b)). A gain on a home sold while other lets continue does not absorb it.

## Spouses

The examples take a couple married out of community of property with the accrual system, each owning half of every home and funding their half. They are two taxpayers: each is taxed on their own salary and half of the rent, losses and gains, with their own yearly exclusion and donations exemption. Transfer duty on a home bought together is the duty on the whole value, split by share.

Selling the same four homes in one tax year, one person earning R1 000 000 pays R495 509 of capital gains tax and two spouses earning R500 000 each pay R445 036 (R222 518 each), R50 473 less, because each has a yearly exclusion and their own brackets. If one spouse gives the other an asset, or the money for it, mainly to reduce tax, section 7(2) can tax the rent back in the donor spouse's hands and paragraph 68 of the Eighth Schedule can do the same with a capital gain. The saving therefore assumes each genuinely funds their half.

**Capital gains tax on the same four homes sold in one tax year**

| Owner | Capital gains tax |
| --- | --- |
| One person earning R1 000 000 | R495 509 |
| Two spouses earning R500 000 each, owning half each | R445 036 |

## Myths about companies and trusts

- **"A company pays 27%, so it always beats 45%."** Only on profit left in the company, and in the research only where the homes grew little. Paid out it is 41.6%, and a gain paid out is taxed at 37.28% against at most 18% in your own name.
- **"A trust is a tax shelter."** A trust pays 45% on income it keeps and 36% on gains. It saves tax only by vesting income in lower-taxed resident beneficiaries and by keeping growth out of an estate.
- **"Once you own several homes, they belong in a company or trust."** Moving them is a sale at market value: capital gains tax now, transfer duty, conveyancing and new bonds.
- **"Put everything in a trust and there is no estate duty."** A loan you made to the trust is still in your estate at face value, and an alter-ego trust can be brought back into it under section 3(3)(d).
- **"Vest the rent in my children to use their low rates."** For a minor child, section 7(3) taxes it in the parent's hands. For an adult child it is genuinely the child's income, and a resident trust can pass income through only to a resident beneficiary. In the research the saving was real for two adult children (22 of 36 sold cases), and the money then belongs to them.
- **"Section 42 makes moving into a company free."** It can defer the tax under strict conditions. The fees remain, and the gain is later taxed at company rates and again as a dividend.

## Try it in Counter That, and use the calculators

[Counter That by Privately](/counter-that) is a free South African property game. It lets you hold the homes you buy to let in your own name, a company, a trust or a trust that owns a company, and move a home you already own into one. With two or more rentals, the finish replays your own run with each owner, sold and paid out today and kept until death. It runs on the same tax engine as the worked examples on this page. For teachers, see [Counter That for teachers](/counter-that-for-teachers).

To try your own numbers, use the [own name, company or trust calculator](/calculators/own-name-company-or-trust) and the [what you keep when you sell calculator](/calculators/what-you-keep-when-you-sell). For the rules behind each owner, read the guide on [should you buy property in a trust or company in South Africa](/guides/own-name-company-or-trust-south-africa), which also answers whether to buy a home in a trust or company at all. For the tax on a sale, read the guide on [capital gains tax on property](/guides/capital-gains-tax-property-south-africa).

## What this guide leaves out, and who can advise

Each one-moment example isolates one tax event and ignores the rent collected in between, the cost of cancelling bonds, and whatever else your own situation adds. The research results add the years of holding but rest on one set of assumptions about growth, rent, the bond and running costs. Both assume banks lend to a company or trust on the same terms as to you, with your surety. In practice banks often ask a structure for a bigger deposit or a higher margin. They also assume a trust's running costs are deductible against its rent, though SARS may disallow trustee fees that relate to administering the trust.

Left out entirely: creditor protection, section 13sex allowances, short-term letting and VAT, commercial property, and any discount on the value of company shares for tax still to come inside the company. Income splitting is modelled only as the research's trust that vests income and gains in two adult resident children who each earn R250 000; any other set of beneficiaries is left out.

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

## Frequently asked questions

### Should I hold rental property in my own name, a company or a trust in South Africa?

No owner is cheapest for everyone. In the worked examples your own name left the most when four homes were sold, and a trust that hands its income out left the most at death. In the research a trust that vested income and gains in adult resident children beat your own name in 22 of 36 sold cases, mostly for 41% and 45% owners. That money then belongs to the children, and section 7(3) taxes a minor child's income in the parent's hands. A trust that kept its income for years was behind your own name at death in 30 of 36 research cases. A company tends to suit profit left inside for years on homes that earn more in rent than they grow, for an owner on 41% or 45%. With typical growth and a bond, the research found your own name ahead even for 45% owners who left the profit in the company.

### Is it cheaper to own rental property in a company than in my own name?

A company pays a flat 27% on profit that stays inside it, but 41.6% in all once the profit is paid out and 37.28% in all on a gain, against at most 18% on a gain in your own name. It gets no R50 000 yearly exclusion and costs money to run. In the rent example it stayed ahead of a 41% owner only while it cost less than about R19 200 a year on R100 000 of profit kept, and that figure scales with the profit. With 5% growth and a 50% bond your own name was ahead in all 36 sold cases in the research, including a 45% owner who left the profit in a company for 20 years (R16.23m against R14.59m). The company led only where the homes grew little.

### Should I buy property in a trust in South Africa?

There is no single answer, and a trust does not save tax by itself. A trust that keeps its income pays 45%, and 36% on gains it keeps, against at most 18% on a gain in your own name. It saves tax mainly by passing income and gains to adult South African beneficiaries on lower rates, and by keeping growth out of your estate if it is a genuine trust with an independent trustee. An ordinary trust gets no R3 000 000 home exclusion on the home you live in. A registered tax practitioner or financial adviser can advise on your own situation.

### Can I buy a rental property in a company in South Africa?

Yes. A company can buy and let a property. It pays a flat 27% on the rent, gets no R50 000 yearly capital gains exclusion, and a gain costs 37.28% in all once the money is paid out to you, against at most 18% in your own name. Transfer duty on the purchase is the same whoever buys, and a company that buys the home itself avoids the tax that a move from your own name triggers.

### How is rental income taxed in a trust in South Africa?

Income a trust keeps is taxed at a flat 45%. If the trustees vest it in a beneficiary in the same tax year, the beneficiary is taxed on it at their own rates instead. From 1 March 2026 a resident trust can do that only for a South African resident, and the attribution rules in section 7 can still tax the income in the donor's hands.

### Is moving my rental properties into a company or trust free?

No. It counts as a sale at market value, so capital gains tax is due now, and the new owner pays transfer duty plus conveyancing, Deeds Office and bond fees. For one home worth R3 000 000 that was R339 237 in the example. Section 42 can sometimes defer the tax into a company under strict conditions, but not into a trust.

### What is section 7C and how much can I lend my trust?

Section 7C treats interest you do not charge on a loan to a trust, or to a company a connected trust holds at least 20% of, as a donation each year. The rate is the official rate of interest: 8.25% from 1 October 2026, 8.04% for 2026/27 as a whole if the repo rate holds. With the R150 000 yearly exemption SARS applies, a loan of up to about R1 866 000 from one lender creates no donations tax in 2026/27 if that lender makes no other donations that year. On a R6 000 000 loan it is about R66 485 a year.

### Can I deduct a rental loss against my salary?

In your own name, normally yes. Section 20A can ring-fence the loss, carrying it forward. It needs taxable income before the loss of R695 801 or more, and either losses in 3 of the last 5 years or a listed trade, which a normal long-term let to unrelated tenants is not. It applies only if the escape in section 20A(3) fails: a reasonable prospect of taxable income within a reasonable period. A loss in a company or trust never reduces your salary tax.

### What happens to rental property in my own name, a company or a trust when I die?

In your own name the homes are deemed sold at death. The executor's fee is charged on their gross value, and estate duty (20%) on the estate after its debts and the fee, above the R3 500 000 abatement. In a genuine trust only your loan to it is in the estate. A company's shares are in the estate and the company still owes its own tax. A trust that kept its income for years was behind your own name at death in 30 of 36 research cases.

### Does a company or trust get the R3 000 000 home exclusion or the yearly exclusion?

No. The R3 000 000 primary residence exclusion and the R50 000 yearly capital gains exclusion are for natural persons and special trusts only, never a company or an ordinary trust. A let home is not anyone's primary residence, so only the yearly exclusion matters for a rental portfolio.

### Does a trust that owns a company make sense for a rental portfolio?

For plain residential rentals it tends not to. It combines the company's 27% tax and 20% dividends tax on everything paid up to the trust with the trust's costs, and in the research it was behind your own name at death in 32 of 36 cases.

## Sources

- [SARS: Rates of tax for individuals](https://www.sars.gov.za/tax-rates/income-tax/rates-of-tax-for-individuals/)
- [SARS: Companies, trusts and small business corporations rates](https://www.sars.gov.za/tax-rates/income-tax/companies-trusts-and-small-business-corporations-sbc/)
- [SARS: Capital Gains Tax (CGT) rates and exclusions](https://www.sars.gov.za/tax-rates/income-tax/capital-gains-tax-cgt/)
- [SARS: Transactions between connected persons](https://www.sars.gov.za/types-of-tax/capital-gains-tax/transactions-between-connected-persons/)
- [SARS: Dividends tax](https://www.sars.gov.za/types-of-tax/dividends-tax/)
- [SARS: Other taxes (donations tax and estate duty rates and exemptions)](https://www.sars.gov.za/tax-rates/other-taxes/)
- [SARS: Official rate of interest (Interest Rates Table 3)](https://www.sars.gov.za/wp-content/uploads/Legal/Rates/Legal-Pub-IRT-03-Interest-Rates-Table-3.pdf)
- [SARS: Guide on the ring-fencing of assessed losses arising from certain trades conducted by individuals](https://www.sars.gov.za/wp-content/uploads/Ops/Guides/LAPD-IT-G04-Guide-on-the-Ring-Fencing-of-Assessed-Losses-Arising-from-Certain-Trades-Conducted-by-Individuals.pdf)
- [SARS: Taxation Laws Amendment Act 5 of 2026 (sections 19 and 24)](https://www.sars.gov.za/legal-lprim-aa-2026-03-taxation-laws-amendment-act-5-of-2026-gg-54448-1-april-2026/)
- [SARS: Tax on rental income](https://www.sars.gov.za/types-of-tax/personal-income-tax/tax-on-rental-income/)
- [SARS: Transfer duty rates](https://www.sars.gov.za/tax-rates/transfer-duty/)
- [SARS: Draft interpretation note on meaning of holds a qualifying interest (section 42)](https://www.sars.gov.za/wp-content/uploads/Legal/Drafts/Legal-LPrep-Draft-2026-06-Draft-IN-Meaning-of-holds-a-qualifying-interest.pdf)
- [National Treasury: Budget 2026 Tax Guide](https://www.treasury.gov.za/documents/national%20budget/2026/sars/Budget%202026%20Tax%20guide.pdf)
- [Income Tax Act 58 of 1962 (gov.za)](https://www.gov.za/documents/income-tax-act-29-may-1962-0000)

## Related guides

- [Should you buy property in a trust or company in South Africa?](https://privately.co.za/guides/own-name-company-or-trust-south-africa)
- [Capital gains tax when you sell property in South Africa](https://privately.co.za/guides/capital-gains-tax-property-south-africa)
- [Transfer duty and transfer costs in South Africa](https://privately.co.za/guides/transfer-duty-and-transfer-costs)
- [Selling an inherited house in South Africa](https://privately.co.za/guides/selling-an-inherited-house-south-africa)
- [The prime rate in South Africa today, and what it means for your bond](https://privately.co.za/guides/prime-rate-south-africa)

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Figures verified 2026-10-09. General information about South African property practice, not legal or financial advice.

Source: Privately, https://privately.co.za/guides/property-portfolio-company-or-trust