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By Onah Attorneys Inc • Updated July 2026 • Legal information, not a substitute for advice on your specific matter.
Give the house to the kids now and skip estate hassles later — the instinct is right, the execution usually isn’t: 20% donations tax, capital gains on the ‘gift’, transfer costs, and s7C traps on the loan-account workaround. Here is how giving actually gets taxed, and the structures that move wealth down a generation lawfully and cheaply.
The basics: 20% above R100,000
Donations tax: 20% of the value donated (25% above R30m cumulative), payable by the DONOR, with the headline exemption of R100,000 PER PERSON PER TAX YEAR. Spouses donate to each other tax-free entirely. The annual R100k is the retail planning tool: consistent yearly gifts move meaningful wealth over a decade without a cent of donations tax — documented, dated, banked.
The taxes hiding behind the gift
A donation is also a DISPOSAL for capital gains tax: gift the flat you bought for R500k now worth R2m and you trigger CGT on the gain (annual exclusions aside) — plus the deeds office transfer process (transfer duty exemptions for genuine donations don’t erase conveyancing costs and the CGT). Donating growth assets is therefore the expensive route; donating cash within exemptions, or selling at market value on LOAN ACCOUNT, usually beats it.
The loan-account route and s7C
The classic: sell assets to the kids (or their trust) at market value on an interest-free loan, then donate R100k of the loan away each year. Section 7C now taxes the foregone interest on interest-free/low-interest loans TO TRUSTS (and companies they hold) as an ongoing annual donation — official-rate interest imputed, eating part of the benefit. The route still works (especially direct to children rather than trusts, where s7C doesn’t bite), but it’s a calculation, not a slogan — model it against your numbers.
Trusts, education and the anti-avoidance web
Paying for children’s education, maintenance and reasonable support is NOT a donation — parents’ duty of support covers it, uncapped. Bona fide maintenance payments are exempt. But income attribution rules (s7) throw income earned on donated assets back into the donor’s hands while minors benefit — the fantasy of shifting investment income onto the kids’ tax tables mostly fails while they’re minors. Structures need the income-tax map, not just the donations-tax one.
Death-bed maths: donate now vs estate duty later
Estate duty: 20% above the R3.5m abatement (R7m usable between spouses). Donations tax and estate duty are the same 20% wall in different places — the wins come from: growth removed early (donate/sell the asset BEFORE it appreciates), the annual R100k drip, spouse exemptions, and liquidity planning (policies in trust). Deathbed donations solve little (donations within the estate’s net get pulled back in). The right plan is a spreadsheet with your actual assets — an afternoon with advisors against a 20% mistake.
Frequently asked questions
Can I give each child R100,000 every year tax-free?
The R100k exemption is per DONOR per year (not per recipient) — you can split it among children; your spouse has their own R100k. Two parents = R200k a year, documented.
Is paying my adult child’s university fees a donation?
Genuine maintenance and education within your duty/means is exempt support, not a donation — pay institutions directly and keep it obviously maintenance-shaped.
Should I put the family home in the kids’ names now?
Usually no: CGT on the disposal, loss of your primary-residence exclusion later, their creditors/divorces attach it, and you lose control. Wills, usufructs and trusts handle homes better — model before moving title.
Does SARS really check small family gifts?
Donations above exemptions require IT144 declarations and tax; bank flows are visible. The drip strategy works precisely BECAUSE it’s declared and boring — undocumented ‘loans’ that were gifts unravel in estates and audits.
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