Good news for first-time home buyers in South Africa

There have been changes to transfer duties in South Africa, which is good news for first-time buyers.

During the budget speech on Wednesday, 22 February, Finance Minister Enoch Godongwana said that the brackets in the transfer duty table will be increased by 10%.

Until 28 February 2023, properties sold for R1,000,001 to R1,375,000 will have to pay 3% of the value above R1 million in transfer duties.

From 1 March 2023, there will be no transfer duties for properties between the value of R1 million and R1.1 million. Instead, properties sold for between R1,100,001 and R1,512,500 will have to pay 3% of the value above R1.1 million.

Essentially, the first R1.1 million of any property purchase price is tax-free.

Berry Everitt, CEO of the Chas Everitt International property group, said the changes would benefit and encourage first-time buyers, while BetterBond CEO, Carl Coetzee said the move would help many more people get a foot on the property ladder.

Ahead of the budget, property group Seeff called for the house price threshold for exemption from transfer duty to be increased as it had been at R1 million for more than two years.

“For the price bands above R5 million, an increase in sales volumes can generate significantly more income for the economy and fiscus. You have to sell many more homes at R1 million to generate the direct and indirect economic benefits that a R10 million or R20 million-plus sale does,” it said.

During the budget speech, Godogwana did not announce any major tax proposals due to revenue predictions being higher than expected.

Expected tax revenue collections are expected to reach a total of R1.69 trillion for 2022/23, exceeding the Budget estimate by R93.7 billion and the total Medium Term Budget Policy Statement estimate by R10.3 billion.

“The improvement in revenue is due to higher collection in corporate and personal income taxes, and in customs duties. This partially offset the lower value-added tax estimates.”

“Our country is reaping the benefits of a more efficient and effective tax administration, that is building trust to increase voluntary compliance and boost revenue collections,” Godogwana said.

Below are the transfer duty changes (Sourced from Adams and Adams):

On top of the changes for transfer duties, experts from the property sector also welcomed the announcement of a solar rebate for households looking to install solar panels.

Under the new tax incentive, households that install solar panels are entitled to a 25% rebate on the cost of the panels to a maximum of R15,000. While some doubts have been raised as to whether the rebate will be impactful enough – especially considering the high cost of solar – it was broadly seen as a step in the right direction.

The property and realty sector expressed hope that at some stage the government would extend the rebate or apply a new incentive to batteries and inverters, which make up a bigger cost of solar installations.

Solar installations are becoming a key value-booster for properties, with many buyers looking for backups and other ways to mitigate persistent load shedding in the country.

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