Transfer Duty Changes: How does this affect your purchase?

 

The recent budget speech has changed the method of calculating transfer duty on the sale of immovable property. Any sale concluded after 1 March 2020 will have transfer duty payable in accordance with the following scales:

2021 Period (1 March 2020 – 28 February 2021)

Value of the property (R)

Rate

1 – 1 000 000

0%

1 000 001 – 1 375 000

3% of the value above R1 000 000

1 375 001 – 1 925 000

R11 250 + 6% of the value above R 1 375 000

1 925 001 – 2 475 000

R44 250 + 8% of the value above R 1 925 000

2 475 001 – 11 000 000

R88 250 +11% of the value above R2 475 000

11 000 001 and above

R1 026 000 + 13% of the value exceeding R11 000 000

If you concluded your sale before 29 February 2020, the previous scales will still apply as per the below:

2020 Period (1 March 2019 – 29 February 2020)  

Value of the property (R)

Rate

0 – 900 000

0%

900 001 – 1 250 000

3% of the value above R900 000

1 250 001 – 1 750 000

R10 500 + 6% of the value above R 1 250 000

1 750 001 – 2 250 000

R40 500 + 8% of the value above R 1 750 000

2 250 001 – 10 000 000

R80 500 +11% of the value above R2 250 000

10 000 001 and above

R933 000 + 13% of the value exceeding R10 000 000

What does this mean?

 

If you purchased a property for R950 000,00 in the 2020 period, then you would pay duty on R50 000,00 at a rate of 3%, therefore R1 500,00 transfer duty would be payable.

If the same property is purchased for the same amount of R950 000,00 in the 2021 period, the transfer duty is at a rate of 0%, therefore the amount of transfer duty payable would be R0,00.

The calculation of the transfer duty on the above scales is dependent on the date the sale agreement was signed by all parties (date of last party signing). It is not dependent on the date that suspensive conditions are met, even though suspensive conditions make the sale conclusive.

Please also take into account, when transfer duty is calculated, SARS may determine that the higher amount between a municipal value or purchase price be used in determining the amount of transfer duty payable. Therefore, if a municipal value is higher than the purchase price, you might be liable to pay a higher amount of transfer duty. In these instances, SARS usually requires two independent estate agent valuations in support of determining the value of the property.

Should you need to calculate the amount of transfer duty payable on your purchase price, please refer to our Conveyancing Costs Calculator on our website. Should you have any other queries regarding the transfer process, please email our Conveyancer, Marchelle Botha or call 031 266 2530.