by Linda Lamprecht, Immigration expert at PricewaterhouseCoopers, South Africa
Linda.lamprecht@za.pwc.com

Foreign homeowners will in future benefit, as they will be able to meet the relaxed requirements for the long-term visitors permit and retired person’s temporary residence permit, says Linda Lamprecht, immigration advisor at PricewaterhouseCoopers.

Our “swallows” will be relieved to hear that there have been substantial improvements in the South African immigration requirements since their initial shock release in December 2002.

It is presently rumoured that the newest amendments will come into effect during the early part of 2004. There is however already substantial relief available. Especially in view of the increase in the cost of living in Europe, South Africa is becoming more and more attractive to our foreign visitors. It is a win-win relationship for both sides, as the increase in foreign residents, generate additional jobs directly and indirectly.

“Swallows” could technically only once every three to four years worry about temporary permits if they utilise the new permit categories, as they could enter and leave as often as they prefer within the period of validity of the permit. The requirement of a joint pension of R20, 000 monthly is also quite reasonable.

It is understood that the newest draft regulations provide for discount to foreign homeowners of up to R10 000 monthly, as they would only need to demonstrate a pension of R10, 000 per couple, after the value of the property which is available for their personal use, is deducted from the R20 000.of the income which must be substantiated.

An important question that is raised is the aspect of calculating the discount in lieu of property available for personal use. It appears that the amount that may be deducted will be calculated in accordance with the rental value of the property. If a house is valued at R 800, 000 and the average rental for such houses is R8, 000 for the area, the amount of R8, 000 will be deducted from the R20, 000 of pension that is required per couple. The result is that the foreign national will only have to demonstrate a pension of R14,000 or Euro 1,750 monthly.

The pension income may also consist of several pensions and need not be one single pension of the one individual only. It may be the combined pension of a husband and wife or of life-partners, who can also be both male for example.

Financial planning often leads to property not being held in the individuals hands but rather in a trust or company. In such cases, it is slightly more difficult to prove ownership. In the case of a property being held in a company, the foreign national would have to demonstrate that he owns the shares in the company and may require confirmation thereof by his chartered accountant.

If properties are held in a trust, matters are slightly more complicated. The foreign national would have a number of options available, to either forget about proving ownership, transferring the property into his own name (which will incur substantial transfer costs and cancel the estate planning value) or to obtain a letter of the Trustees to verify that the trust holds the assets of the non-resident and that the trustees herby confirm that they will grant free use of the property to the non-resident for a period of X years or unlimited access. Such statement grants a usufructuray to the individual, which may have tax effects.

Some foreign visitor may have to re-assess some of the planning tools to establish an option that is both tax, estate planning and immigration legislation friendly, Lamprecht adds.

There are always options worth pursuing and sound advice is rather important to make the journey as pleasant as possible.