Deceased Estate With Property: Transfer, Rates Clearance and the Bond

Nothing moves until the executor is appointed

Immovable property stays registered in the deceased's name until the executor transfers it. No heir can sell their share, no buyer can be given transfer, and no bond can be registered over it in the meantime.

The property is also the main reason estates with a house take longer than estates without one. Conveyancing and the Deeds Office run on their own clock, and it sits at the end of the process rather than the beginning.

There is no transfer duty on an inheritance

This is the good news and it is worth saying plainly, because families are routinely quoted for it in error. Property acquired by inheritance from a deceased estate is exempt from transfer duty under the Transfer Duty Act.

What is payable is conveyancing fees, Deeds Office registration fees, and the cost of getting the clearances. Those are real, but they are far below what transfer duty on the same property would be.

• Conveyancing fees, which scale with the value of the property and are charged by the transferring attorney.
• Deeds Office registration fees.
• Rates clearance figures from the municipality, and any arrears that must be settled to get the certificate.
• Bond cancellation costs, where a bond is being cancelled.
• Where the property is SOLD to a third party rather than inherited, the buyer pays transfer duty in the normal way. The exemption covers the transfer to an heir, not a sale.

The rates clearance certificate is usually what holds it up

Before the Deeds Office will register a transfer, the municipality must issue a rates clearance certificate. To get it, outstanding municipal debt on the property has to be settled, and municipalities can require several months of charges to be paid in advance as well.

In an estate this becomes a timing problem: the municipal account keeps running while the estate is being wound up, often for a year or more, and the arrears grow. Keep the rates and services paid out of estate funds during the administration rather than letting them accumulate.

Municipal figures also expire. If the transfer misses the validity window the figures have to be reissued, and any further arrears settled again.

What happens to the bond

• The bond does not die with the borrower. It remains a debt of the estate and the bank remains secured over the property.
• If there is life cover ceded to the bond, it typically settles the outstanding balance. Check for this before assuming a sale is necessary.
• If an heir wants to keep the property and the bond is not settled, they generally have to apply for their own bond and qualify for it in their own right. The bank does not simply transfer the existing bond.
• If neither the estate nor the heirs can service or settle the bond, the property is usually sold and the balance distributed.
• Keep paying the bond instalments out of estate funds where you can. A bond that falls into arrears during the administration can end in the bank taking legal steps, which is a far worse outcome than a delayed transfer.

Capital gains tax on the property

Death is treated as a disposal of the deceased's assets at market value on the date of death, under paragraph 40 of the Eighth Schedule to the Income Tax Act. That can trigger capital gains tax in the deceased's final tax return.

Two reliefs matter most. Where the asset goes to a resident surviving spouse, there is a rollover and no gain is realised at that point, the spouse simply takes on the deceased's base cost. And the primary residence exclusion currently shelters R3 million of the gain on a primary residence. In the year of death the annual exclusion is also increased, to R440,000, against the normal R50,000 for a living individual.

These figures are for the 2027 tax year and SARS reviews them each Budget. Confirm them for the year of death rather than the year you are reading this.

Selling instead of transferring

The executor can sell estate property, and often must, in order to pay debts or because the heirs cannot agree or cannot afford to keep it. The proceeds then flow through the estate and are distributed as cash.

Where the estate is a section 18(3) small estate administered by a Master's Representative, a sale of immovable property needs particular care. The Letters of Authority do not automatically carry the same powers as Letters of Executorship, and the Deeds Office or the buyer's attorney will often require the Master to confirm the representative's authority to sign. Raise this with the Master early rather than at the deed of sale stage.

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