While potential homeowners may have their heart set on the listed price of a new home, there are a number of additional costs when taking ownership of a new home – notably transfer duties.
Typically associated with homes, transfer duty is a tax that is payable on all types of properties and is based on the value (not the the selling price) of a property.
Rhys Dyer, CEO of ooba, South Africa’s largest bond originator, explains that transfer duty should not be confused with transfer costs, which include all the expenses associated with a property transfer, such as the cost of registering a bond and conveyancing fees.
“When a home is acquired by a buyer, he or she becomes liable for transfer duty,” he said.
“Like all sale-and-purchase agreements in this country, the date of acquisition is considered to be the date on which the transaction was entered into – that is, the date on which the last-contracting party signed the agreement.”
Dyer notes that this rule applies regardless of whether the agreement is subject to conditions, such as the seller accepting the purchase offer only when the buyer obtains a bond – in this case, for instance, transfer duty applies from the date of the offer, not the date on which financing is approved.
Despite a steep increase in 2017, buyers who were hoping for a decrease in 2018 were let down by the February budget which confirmed that transfer duties will remain the same.
This follows a decrease in the amount that government typically collects for property transfers in 2017, with the sustained prices likely aimed at clawing back some of this shortfall.
These are the transfer duty rates applicable on property purchased on or after 1 March 2018 until 28 February 2019:
|Value of property||Rate|
|0 – R900 000||0%|
|R900 001 – R1 250 000||3% of the value above R900 000|
|R1 250 001 – R1 750 000||R10 500 + 6% of the value above R 1 250 000|
|R1 750 001 – R2 250 000||R40 500 + 8% of the value above R 1 750 000|
|R2 250 001 – R10 000 000||R80 500 +11% of the value above R2 250 000|
|R10 000 001 and above||R933 000 + 13% of the value above R10 000 000|