On advice from her previous advisor, Nandipha is considering transferring her flat to the Bester Family Trust. The trust is in the process of being formed formed. She was advised that the transfer of the flat would reduce her estate duty liability.

The sale of the flat is intended to be at its full market value. As the trust is newly formed Nandipha intends to provide the trust with a loan for the purchase price. The loan will attract interest at a rate of $3,5$ per annum. $($Accept that the official rate is $7\%$ per annum$).$

Nandipha is surprised when you tell him that selling the holiday home to the trust will result in a substantial tax liability for her. Explain to Nandipha what taxes and how much tax will be payable as a result of the sale. Show all calculations to assist in illustrating your point.