Purchasing Property with Overseas Funds

Forex, has become a buzzword in modern conversations, which many are familiar with but not too certain as to the meaning of it.

Forex is essentially foreign exchange, which we ordinarily use when travelling and where we need to convert our currency to the currency of the country we are travelling to, to use same.

Forex can also be applicable when a purchaser uses funds / currency from overseas to secure the purchase price or a deposit thereof, in respect of an immovable property being purchased.  

There are various companies, brokers and banks which offer services to exchange currency into the preferred currency. These companies can also facilitate the selling, buying or converting of currency into Rands for purposes of purchasing the property. Naturally, all monies coming into the country from foreign soil must go through the Reserve Bank in respect of exchange control measures, which will then, together with the South African Revenue Services, analyse potential tax due and payable.  This may be prior to or post the monies being transferred into the preferred South African bank account or asset being disposed of after acquisition, this in accordance with the applicable regulations and legislation.  

It is crucial that the receipt and documents relating to the exchange is kept by the purchaser, as this will be required to convert the funds back into the foreign currency or to repatriate the funds.  These documents may also be required from the banks if a portion of the purchase price is to be secured by a mortgage bond and will form part of the bond conditions which would need to be met before the bond can be registered.  

It is essential that a prospective purchaser communicate to all parties that funds will be coming from overseas.  This will allow the parties to make ample time-wise provisions in the offer to purchase, for the deposit to land, and/or other conditions to be met.  

Written by: Deonalin Pongolani
Moderated and approved by: Jean-Mari De Beer – Le Grange

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