Are you trying to purchase property in South Africa? Then you must have come across Transfer duties, transfer cost, and exemptions while doing your research. This article gives you everything you need to know about paying your dues to the government, the new rates in 2020, and much more.
The transfer duty 2020 has been modified to suit the consumer better. Read on to see the reduced rates on property, calculate transfer duty costs, and more.
What is transfer duty in South Africa?
It is a tax that is paid to the South African government by anyone looking to buy any form of fixed property.
In February 2020, the Finance Minister Tito Mboweni announced the new budget. In his speech, he included new changes to the Sars transfer duty.
The major change was that the purchase of property worth less than R1,000,000 will not have any transfer duties, whereas previously, it did. This change took effect in March 2020.
What is the difference between transfer cost and transfer duty?
Transfer cost is a total sum of the fees charged by the lawyer handling the legal procedure, the expenses they incur during this period, and the transfer duty. In comparison, the Transfer duty is paid to the government as tax.
Your attorney will do the transfer costs calculator because it is higher than the transfer duty.
How do you work out transfer duty?
Are you wondering, how much is transfer fees on a house in South Africa? The outline and the table below show how to calculate Transfer fees 2020 as per the new regulations.
- When you intend to purchase a property valued between R1,000,001 and R1,375,000, the duty will apply to 3% of that property's value.
- If the property's cost lies between R1,375,001 and R1,925,000, the consumer will be charged R11,250 and an added 6% of the total value of the property.
- For property that is valued above R1,925,000, you will be charged R44,250 and an added 6% of the property's total value.
- For property that costs above R2,475,000, you will part with a fixed amount of R88,250 and an additional 11% property value.
- If the property to be purchased is above R11,000,000, you will have to pay transfer duties of R1,000,000 and an additional 13% of the value of the property.
This Transfer duty table will be able to guide you as a Transfer duty calculator.
Transfer duty exemptions
Some special occasions can prevent the buyer from having to pay duties. These are outlined below:
- Marriage: comes with a property merge
- Divorce. If done professionally, no duties will be paid on the property.
- Inheritance. Inheritance from a deceased person is exempt from the duties.
- Terminated property deal. If done before lawfully, you will be exempt from paying duties.
You can refer to the full legal requirements for more information. This is contained in section 9(20) of the Transfer Duty Act.
That is the outline about everything you need to know about Transfer Duty 2020 and how to calculate your Transfer duty in South Africa.