Top 5 things to consider when buying property in Mauritius
Category Live in Mauritius
One of the main reasons for South Africans to move to Mauritius is the tax incentive. Buying property priced from USD375,000 upwards also comes with the privilege of permanent residency.
Before you make the final decision on the move, the purchase, or both, make sure you seek expert advice to fully understand the Mauritian and South African legislation that might affect you.
If you are in the market for a property, this is what you need to decide:
- Are you buying a second home, purely for investment purposes, which means it can generate rental returns?
- Are you buying a property as your primary residence alongside your intention to emigrate to Mauritius?
- Are you a South African tax resident and will you remain one for the foreseeable future?
- Do you have other offshore assets in your portfolio, and what existing structures - if any - do you have in place to house these? Do you intend to grow this international asset portfolio?
- How many days a year do you intend to be resident in Mauritius?
Who can buy property in Mauritius?
South Africans can only buy island property in a government-approved scheme geared for foreign investment. This might be a Property Development Scheme, Integrated Resort Scheme or Real Estate Scheme.
You can buy property as:
- A natural person, whether a citizen of Mauritius, a noncitizen or a member of the Mauritian diaspora
- A company incorporated or registered under the Companies Act
- A société, where its deed of formation is deposited with the Registrar of Companies
- A limited partnership under the Limited Partnerships Act
- A trust, where the trusteeship services are provided by a qualified trustee
- A foundation under the Foundations Act
Note: A qualified global business as defined under the Financial Services Act 2007 holding a Global Business Licence may acquire property under the PDS.
Tax advantages
- No capital gains tax
- No inheritance, wealth or gift tax
- Flat 15% individual tax rate
- Corporate tax rate of 15% or lower
- No exchange control
- Strong tax treaty network
- No dividend, interest or royalties withholding taxes.
What happens to your property if you die?
According to Sanlam Private Wealth, while there may be no inheritance tax in Mauritius, there are "forced heirship" rules that mean "you're not completely free to decide how your assets are disposed of upon death. A certain portion will be reserved for your heirs. The unreserved portion may, however, be freely bequeathed to any person or entity. This reserved portion varies depending on the number of heirs you have, and it is important to note that this does not include your spouse. Immovable property in Mauritius is governed by this law, and movable property can also be affected depending on the last domicile of the deceased.
It is therefore advisable to draw up a Mauritian will to deal with the 'unreserved portion' of any assets affected by the Mauritian succession laws.
In Mauritius, a loan to a Mauritian trust or company (to buy the property), and the shares in the company, are both considered movable assets."
SA rules
Make sure you investigate what SA legislation will impact buying property in Mauritius.
If you buy a property in your own name, it will form part of your estate so remember the Mauritian forced heirship rules when drafting your South African will. In addition, while estate duty will be payable on it in SA there is no estate duty in Mauritius.
If you buy the property through a Mauritian company owned by a South African resident, the shares in the company will form part of your estate in SA.
We can assist you in your decision-making process by introducing you to the experts on tax and fiduciary legislation in Mauritius and in South Africa.
Contact Rinie on rb@propertytime.mu or +230 5817 7553 to find out more.
Author: Rinie Boshoff