Taxation in South Africa, as in any country, is a complex system and needs the depth of knowledge of an expert to navigate it successfully. Below is a brief outline to help you become acquainted with the structure.
Tax laws are areas that require specialist knowledge and a good tax expert can help property investors legally save tax. We strongly advise property buyers in South Africa to seek professional help and are able to put you in touch with an advisor who will examine your particular needs and assist with your tax planning.
Taxes incurred when purchasing a property in South Africa are standard throughout the country. However taxes for the maintenance of municipal facilities can vary from region to region.
Transfer duty is a one-off real estate tax payable at the time of property purchase. In February 2006 the threshold for this tax for individual buyers was raised and the new rates are as follows:
No duty up to ZAR 500, 000 of the purchase price
ZAR 500, 001 - ZAR 1 000,000 5% (R25 000)
ZAR 1, 000,001 and above plus 8%.
Limits for companies purchasing properties have not changed and are charged at a flat rate of 8% of the value of the property.
Non-resident property owners in South Africa are only liable for income tax when letting out their properties. The tax threshold for individuals is ZAR 43,000.00 and for the over 65's ZAR 69,000.00. Property owners are responsible for registering with the tax authorities and ensuring the correct amount of tax is paid.
Capital Gains Tax (CGT) is a fairly new tax in South Africa and was introduced in 2001 and applies only to the sale of fixed property. Non-residents are liable for this tax when they sell their property and it is added to the annual income tax bill. South African residents do not pay CGT on the first ZAR1.5 million of profit made on the sale of their primary residence.
Inheritance tax was abolished when CGT was introduced, but should the owner of a property die, they are considered to have disposed of the property and CGT becomes payable at this point.
VAT on the sale of a property is usually not charged, unless the property is part of a new development. However if the seller is a registered vendor for Value Added Tax purposes, in other words a developer of a new residential scheme, VAT at a rate of 14% will be charged as part of the purchase price and the purchaser will be exempted from transfer duty.
Stamp duty does not apply in the South African purchase process, nonetheless it is charged on rental agreements. In the 2007 budget, the first ZAR 500 on the rental agreement was exempted from stamp duty.
South Africans refer to these as “property taxes” and they are the charges for services such as refuse collection and street maintenance. This charge is calculated on the municipal value of the house (usually lower than the actual purchase price) and the percentage to be paid varies according to municipality -in Cape Town the percentage in 2007 was 0.98% per annum. A separate charge is levied for sewerage disposal, which is calculated on the amount of waste water leaving the house.
Get the latest property and investment opportunities direct to your inbox for FREE (you can unsubscribe anytime)
South African Listed Real Estate Outclasses Equities in 2015
Five African Property Markets in Top 10 Emerging Economies
More South African Buyers Expected in UK Property Market
South Africa: Rand Investors' Misfortune is Foreign Investors' Gain
The Rise of the First Time Buyer in South Africa
Key Real Estate Investment Opportunities in Africa
All property news from South Africa
Subscribe to our RSS Feed
Fill out a requirements form and our experts will help you find a great selection of properties for sale in South Africa.
Help me find property in South Africa
Considering a property purchase in South Africa or need to transfer currency to/from South Africa?
Save Thousands in Currency Transfers
When considering a buying property in South Africa, you are well advised to get expert mortgage advice from a mortgage broker.
Get a mortgage quote in South Africa
Owners Direct is one of the UK's leading direct from owner rental websites and the first choice for holiday home owners who want a cost effective and easy way to fully book their properties.
Find out more
If you own or are about to purchase property in South Africa, you get an insurance quote using our online insurance quote form.
Get Insurance in South Africa
Do you have your British assets covered by a will?
Do you have your movable foreign assets covered by a will?
Have you made plans to protect your family in the event of your death?
Get more information on Wills
Everything you need to know about transferring your UK Pension is in our downloadable guide.
Get more information on Pensions
Free State Property
Limpopo Province Property
Province of Eastern Cape Property
Province of KwaZulu-Natal Property
Province of North-West Property
Province of Northern Cape Property
Province of the Western Cape Property
Subscribe to our newsletter and keep up to date with the latest and best investment opportunities around the world!