A comprehensive guide to transfer duties, capital gains tax, and municipal rates for property owners and investors.
Transfer Duty
Transfer duty is a government tax payable by the buyer on all property purchases above R1,100,000 (the 2024/25 threshold). The rate is calculated on a sliding scale, ranging from 3% on the value between R1.1m and R1.512m, up to 13% on the value above R2.246m. VAT-registered sellers (typically developers) charge VAT instead of transfer duty — buyers should clarify which applies before signing.
Capital Gains Tax (CGT)
When you sell a property for more than you paid, the gain is subject to Capital Gains Tax. For individuals, 40% of the net capital gain is included in taxable income (the inclusion rate). The effective CGT rate depends on your marginal tax bracket. Your primary residence enjoys an exclusion of up to R2 million on the gain, significantly reducing the tax burden for most homeowners.
Municipal Rates
Municipalities levy annual rates on properties based on their municipal valuation. Rates vary significantly between municipalities and property categories. Residential properties generally attract lower rates per rand of value than commercial or agricultural properties. Property owners should verify their current municipal valuation and, if overvalued, lodge an objection during the public roll period.
Sectional Title Levies
Owners in sectional title schemes pay monthly levies to the body corporate. These cover building insurance, common area maintenance, security, and contributions to the reserve fund. Levies are not a tax, but they directly impact the net return on investment and should be carefully assessed before purchase.
Estate Duty and Inheritance
Property held in an estate at death is subject to estate duty at 20% on dutiable amounts up to R30 million, and 25% above that. Proper estate planning — trusts, life insurance, and will structuring — can significantly reduce the tax burden on your heirs. Our extended network includes specialist estate planners who can advise you appropriately.
Get Professional Advice
Property taxation is complex and changes regularly with budget announcements. Always consult a qualified tax practitioner or conveyancing attorney before making significant property decisions. Property Wealth Link can connect you with trusted professionals in our extended network.
