Transfer duty is an indirect tax on the acquisition of immovable property situated in South Africa. The following are the main provisions:
- It is calculated on the value of the immovable property (purchase price or market value, whichever is the highest).
- It is payable within 6 months after the transaction is entered into.
- Where a registered VAT vendor purchases property from a non-vendor, the notional input tax is calculated by multiplying the tax fraction (presently 14/114) by the lessor of the consideration paid or market value.
- The acquisition of a contingent right in a trust that holds a residential property or the shares in a company or the member’s interest in a close corporation which owns residential property comprising more than 50% of its assets, is subject to transfer duty at the applicable rate.
Transfer duty is calculated as follows:
R0 – R750 000 = 0%
R750 001 – R1 250 000 = 3% of the value above R750 000
R1 250 001 – R1 750 000 = R15 000 plus 6% of the value over R1 250 000
R1 750 001 – R2 250 000 = R45 000 plus 8% of the value over R1 750 000
R2 250 001 + = R85 000 plus 11% of the value over R2 250 000
The most notable exemptions from transfer duty are the following:
- If the purchase price/value is R750 000 or less.
- If the transaction is subject to VAT (i.e. where the seller is a VAT vendor).
- In the event of immovable property being transferred to a person (including a close corporation, company or trust) in terms of a will or as a result of intestate succession.
- The transfer of any property to a surviving spouse, or divorced person, who acquires sole ownership of the whole or any portion of property registered in the name of his or her deceased or divorced spouse where that property or portion is transferred to that surviving or divorced spouse as a result of the death of his or her spouse or dissolution of the marriage or union.