Of all the costs involved in purchasing a home, transfer duty is one of the largest.
Buying a property in South Africa involves more than just the purchase price.
One of the additional costs that many buyers need to budget for is transfer duty, a tax levied by SARS. Understanding how this tax works is essential for anyone entering the property market, whether you are a first-time buyer, an investor, or simply moving to a new home.
What is transfer duty?
Transfer duty is a tax imposed on the acquisition of immovable property, such as land or a house, that is payable to SARS. In simple terms, it is a tax charged when ownership of property is transferred from one party to another. It is different from transfer costs, which are the fees charged by conveyancers (attorneys who handle the legal transfer of property).
The purpose of transfer duty is to generate revenue for the government, while also ensuring that property transactions are properly recorded and regulated.
Who pays transfer duty?
The responsibility for paying transfer duty rests with the buyer of the property. Once an offer to purchase has been accepted, the conveyancing attorney handling the transfer will calculate the duty owed and collect it from the buyer before lodging the transfer documents with the Deeds Office.
It is important to note that transfer duty must be paid before the transfer can be registered. If it is not paid within the required timeframe, SARS may charge penalties and interest.
Exemptions from transfer duty
There are situations where transfer duty is not payable. These include:
- Properties under a certain value: As per the latest SARS thresholds (2025/26), no transfer duty is payable on properties valued at R1,210,000 or less.
- VAT-inclusive transactions: If the seller is registered for VAT and the sale is subject to VAT – usually the case for new-build properties or ‘off-plan’ purchases – then VAT is charged instead of transfer duty.
- Inheritance: Properties acquired through inheritance are exempt from transfer duty. This is largely to mitigate the possibility of double taxation where an estate is subject to estate duty.
- Divorce settlements: In cases where a property is transferred between spouses as part of a divorce settlement, transfer duty may not be payable.
Transfer duty rates
Transfer duty is calculated using a sliding scale based on the value of the property. The rates are adjusted periodically by the government.
Transfer duty is a ‘progressive’ tax, i.e., the higher the property price, the higher the rate of transfer duty payable.
Practical example
If you purchase a property for R3,500,000, the transfer duty will be calculated as follows:
| 0% on the first R1,210,000 | R0 |
| 3% on the next R453,800 | R13,614 |
| 6% on the next R665,500 | R39,930 |
| 8% on the next R665,500 | R53,240 |
| 11% on the remaining R505,200 | R55,572 |
| Total transfer duty payable: | R162,356 |
This example highlights the importance of factoring in transfer duty when planning your property budget.
Why transfer duty matters
For many buyers, transfer duty represents a significant cost on top of the purchase price. Being unaware of it can lead to financial strain or delays in the transfer process. Estate agents and conveyancers often advise clients to budget for this expense early on to avoid surprises.
Additionally, understanding whether VAT or transfer duty applies can make a major difference in affordability, particularly for buyers looking at new developments where VAT is usually charged instead. This is because while buyers need to raise the transfer duty in cash, the VAT portion is usually financed by the home loan.
Transfer duty is a key consideration in any property purchase in South Africa. Buyers should ensure that they understand how the tax is calculated, when it is payable, and whether any exemptions apply to their situation.
By doing so, they can plan their finances better and ensure a smooth transfer process.
While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.