What is Transfer Duty?

What is Transfer Duty?

Buying a property is more than just making a purchase, and it’s not over after a single transaction. There are certain payments and procedures you’re expected to make and follow in order to legally attain the property. 

Transfer duty is a tax you must pay when you acquire immovable property. This fee is imposed by SARS and is applicable to most purchases. 

You have up to six months after the date of acquisition to make the payment. If you miss this deadline, you could incur interest penalties. The payment must be made before your conveyancer can lodge your property transfer at the Deeds Office. 

Latest Updates

As of April 1st, the Minister of Finance announced that properties valued at or below R1.2 million are exempt from transfer duty. The transfer duty for properties that exceed R1.2 million will have transfer duty costs calculated on a sliding scale, starting at 3% and can escalate up to 13% for properties over R13 million. 

Transfer Duty Exemptions 

In special cases, the transfer duty is not payable even if the transaction exceeds the threshold. Your transfer may be legally exempt if: 

• In the event of a partnership dissolution, the property is transferred from your partnership to the individual partners. You won't need to pay transfer duty on your proportional share. 
• You inherit property from a deceased estate. However, the exemption doesn't count if someone sells the property to you at market value. 
• You're getting divorced, and the property transfer is by court order or settlement.
• A spouse automatically receives half of the property when you're married in a community of property.
• The sale is subject to the payment of VAT or if the seller is a VAT vendor. This clause is to avoid double taxation, so the buyer will not have to pay both VAT (usually 15%) and transfer duty. 

Next Steps

The property conveyancer should submit an exemption to SARS and the supporting documentation to prove that your circumstances exempt you from paying transfer duty. 

If approved, the conveyancer should receive a transfer duty exemption receipt, which they'll lodge at the deeds office. This process then completes the register of the property's transfer to you, the purchaser. 

Exemptions exist to ease financial strain and provide some form of tax relief. That's why partnering with a Property Practitioner knowledgeable about exemption grounds will help you avoid unnecessary delays or having to pay penalties.