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Transfer duty in 2022: What buying a home will cost you

ooba Home Loans’ guide to transfer duty provides all the need-to-know on calculating and paying this mandatory property tax.

Transfer Duty

Article summary

  • Transfer duty is not to be confused with transfer of property cost; the latter is a fee paid to the attorney who transfers the property from the seller to the buyer, while the former is a tax payable to SARS.
  • Transfer duty is only required on properties valued at more than R1 000 000.
  • Certain conditions exempt you from transfer duty, such as acquiring a property through marriage in community of property.

Transfer duty is an additional cost that needs to be incorporated into your budget planning when purchasing a property.

It is not to be confused with ‘transfer of property’ costs. This is a fee paid to the conveyancing attorney who transfers the property from the seller to the buyer, whereas transfer duty is a tax paid to SARS on the transfer of property.

Transfer duty is only payable on properties worth more than R1 000 000. If the property is less than that, you will still need to pay the conveyancing attorney for the transfer of property, but there will be no transfer duty tax.

What else should you know about transfer duty?

How much will I pay on transfer duty?

These are the transfer duty rates applicable on property, as of March 2021 to February 2022.

Value of property (R) Rate
0 – 1 000 000 No transfer duty
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 R1 375 000
1 925 001 – 2 475 000 R44 250 + 8% of the value above R1 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 above R11 000 000

Who takes care of my transfer duty payments?

A conveyancing attorney, responsible for the transfer of the property to your ownership, will handle transfer duty payments on your behalf.

When should transfer duty be paid?

Transfer duty is payable within six months of the date of acquisition. Failure to do so will result in penalties.

Under what conditions will I be exempt from transfer duty?

Property transfers are exempt from transfer duty in the following circumstances:

  • Marriage in community of property. If someone who owns a property gets married in community of property, his or her spouse will automatically become the owner of a half-share of the property, without paying any transfer duty.
  • Divorce. Transfer duty does not apply if a property is awarded to a spouse in terms of a divorce order. The exemption applies to all marital regimes and to civil unions. However, if the property is not awarded to a spouse in terms of a divorce order and the parties reach an agreement outside of the formal divorce proceedings, the spouse who acquires the property will be liable for transfer duty.
  • Inheritance. Heirs and beneficiaries are exempt from paying transfer duty on property inherited from a deceased estate, regardless of the nature of their relationship with the deceased and irrespective of whether or not the deceased died without a valid will.
  • Cancelled transactions. If a property purchase is cancelled before the transfer is registered at the Deeds Office, there is no liability for transfer duty if SARS is satisfied that the cancellation is legitimate.

Note By law, a transaction cannot be subject to both VAT and transfer duty and, in a property transaction, the payment of VAT always takes precedence over that of transfer duty where the seller is a VAT vendor.

Check if the seller is registered for VAT. If so, then VAT will be payable on the property purchase, not transfer duty.

Developers often use this marketing ploy to entice prospective buyers, offering homes with no transfer duty. Instead, buyers pay VAT on these homes, but this is more often than not included in the purchase price.

Make the home buying process easier

Understanding additional costs like transfer duty is one of the ways in which you prepare yourself for the home buying process, and ensure it goes more smoothly.

Another way is to employ the services of a home loan comparison service, like ooba Home Loans. We can guide you through the home buying process, as well as give you the best chance of finding a good home loan package by submitting your home loan application to multiple banks (we thereby allow you to compare deals and choose the best one).

We also offer a range of tools that can make the home buying process easier.  Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.

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Estelle Vorster was really helpful in securing the best deal for my home loan, she not only negotiated a lower interest rate she went as far as securing 50% discount on the transfer costs.

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