When transferring property in South Africa, it is important to be aware of a tax called Transfer Duty. Generally, when the selling price or value of the property is in excess of a Government mandated threshold value, Transfer Duty is payable at the applicable rate.
However, the concept “transferred” is not exclusive to buying and selling. It also may apply to a renunciation of an interest resulting in the enhancement of a property value thus triggering the Transfer Duty on the increased portion of the value.
There are exemptions to payment of Transfer Duty:
-if the South African Government is the Buyer,
-certain registered charities buy property for charitable activities, –
-joint owners of a property are allocated parts of that property,
-divorced spouses are awarded the former matrimonial home,
-heirs take ownership of a property by testate or intestate succession,
-certain transfers of property take place in the course of administering Trusts where required by a Will,
– if Value Added Tax (VAT) is payable (see below).
The above are the primary exemptions. As there are other exemptions it is highly recommended to consult a professional.
VAT is usually payable by a VAT Vendor and is levied on a transaction that is in the course of an enterprise.
In terms of South African law, transactions that are normally subject to VAT may be exempt from any obligation to pay VAT.
In summary, either Transfer Duty or VAT is payable when disposing of or acquiring property in South Africa. This is apart from any other taxes that may be payable such as capital gains tax.
The article written above is intended to be a general summary. It is vital to obtain proper legal advice regarding your particular circumstances. Please speak to your Lawyer or expert Legal Advisor.
Ismail Ayob and Partners also practice in the fields of Property Law and Tax Law and can be of assistance in queries you may have.