VAT on property purchase in South Africa: your complete guide

Article summary:

• You’ll never pay both transfer duty and VAT on a property purchase.
• VAT usually comprises 15% of the purchase price, while transfer duty increases according to the price of the property.
• Properties valued at less than R1.21 million accrue no transfer duty.

Understanding VAT vs Transfer Duty

When buying property in South Africa, you’ll pay a government tax on top of the purchase price. This is either VAT (15%) or transfer duty, but never both.

The simple rule:

• Buying from a property developer or company?  You pay VAT (15%).
• Buying from a private person (like someone selling their home)?  You pay transfer duty (0-13%).

Think of it this way: VAT is what businesses charge. Transfer duty is what you pay when buying from non-business sellers.

When you pay VAT (15%)

You’ll pay VAT when buying from:

• Property developers (new apartments, townhouses, estates).
• Companies selling office buildings, shops, or warehouses.
• Any business that sells property as part of what they do.

Simple example: You buy a brand new R2,500,000 apartment in a new development.

• Advertised price: R2,500,000.
• VAT added (15%): R375,000.
• What you actually pay: R2,875,000.

Most new developments include VAT because developers are registered businesses. Many developments list their property prices including VAT, which gives clarity that the asking price won’t have an additional VAT amount.

When you pay Transfer Duty

You’ll pay Transfer Duty when buying from:

• Someone selling their own home.
• Inherited property being sold by an estate.
• Private landlords selling their rental property.

Good news for first-time buyers: If you’re buying a property under R1.21 million, you pay ZERO transfer duty!

What you’ll pay (From 1 April 2025)

Here’s what transfer duty costs at different price points:

Property Value	Rate
R0 – R1,210,000	0%
R1,210,001 – R1,663,800	3% of value above R1,210,000
R1,663,801 – R2,329,300	R13,614 + 6% of value above R1,663,800
R2,329,301 – R2,994,800	R53,544 + 8% of value above R2,329,300
R2,994,801 – R13,310,000	R106,784 + 11% of value above R2,994,800
Above R13,310,000	R1,241,456 + 13% of value above R13,310,000

Special case: buying an entire business

Sometimes you can avoid paying VAT by buying the whole business (not just the property). This is called a “going concern” sale.

Requirements:

• You must buy the entire business – all equipment, customers, contracts, everything.
• You must continue running the same business.
• Special legal paperwork is required.

This is complex and requires professional help, but it can save significant money on large commercial deals.

Real examples: what you’ll actually pay

Example 1: Buying your first home

Scenario: You’re buying a R1,800,000 house from someone selling their family home.

How transfer duty is calculated:

• First R1,210,000: R0 (exempt!).
• Next R453,800 at 3%: R13,614.
• Remaining R136,200 at 6%: R8,172.

You pay transfer duty of: R21,786 (No VAT)

Example 2: Buying a new apartment

Scenario: You’re buying a R2,200,000 new apartment directly from a developer.

You pay VAT of: R330,000 Total cost: R2,530,000 (No transfer duty)

Example 3: Buying an office building

Scenario: You’re buying a R3,000,000 office building from a property company.

You pay VAT of: R450,000 Total cost: R3,450,000 (No transfer duty)

Example 4: Buying a luxury home

Scenario: You’re buying a R15,000,000 home from a private seller.

Step-by-step calculation:

• R0 to R1,210,000: R0
• R1,210,001 to R1,663,800: R13,614
• R1,663,801 to R2,329,300: R39,930
• R2,329,301 to R2,994,800: R53,240
• R2,994,801 to R13,310,000: R1,134,672
• R13,310,001 to R15,000,000: R219,700

You pay transfer duty of: R1,461,156 (No VAT)

Paperwork you’ll need

Your conveyancing attorney (the lawyer who handles property transfers) will sort out most of this, but here’s what’s required:

If you’re paying VAT:

• Invoice from the seller showing the VAT amount.
• Proof the seller is registered for VAT.
• Your purchase agreement.

If you’re paying transfer duty:

• Transfer duty form (your attorney completes this).
• Rates clearance (proof municipal bills are paid).
• Various compliance certificates.

Important warning: Getting this wrong can cost you double! SARS can fine you up to 200% of the unpaid tax, plus interest. Always confirm with your attorney whether you’re paying VAT or transfer duty.

What’s changed recently?

Good news for buyers:

• Since April 2025, you don’t pay transfer duty on properties under R1.21 million (up from R1.1 million).
• VAT stays at 15% – the government planned to increase it to 15.5% in May 2025 but changed their mind.
• Interest rates dropped to 7% in July 2025, making home loans cheaper.
• Prime lending rate is now 10.50% – the lowest since 2022.

Common questions

Do I always pay VAT when buying property? No. You only pay VAT when buying from businesses (like developers or companies). When buying from a regular person selling their home, you pay transfer duty instead.

Can I get the VAT back after I buy? Only if you’re a business and you’ll use the property for business purposes. If you’re buying a home to live in, no – you can’t claim VAT back.

What if my agent gets it wrong? This is serious. SARS (the tax authority) can fine you heavily and demand back-payment with interest. Always double-check with your conveyancing attorney whether the seller is VAT-registered.

Is VAT going up? No. It’s staying at 15%. There was talk of increasing it to 15.5% earlier in 2025, but the government decided against it.

When did transfer duty rates change? The current rates started on 1 April 2025. The biggest change was increasing the “no tax” threshold from R1.1 million to R1.21 million.

Ready to buy property?

Knowing whether you’ll pay VAT or transfer duty helps you:

• Budget correctly from the start.
• Apply for the right home loan amount (including taxes).
• Avoid nasty surprises when it’s time to pay.

Need help working out your total costs? At ooba Home Loans, we provide free guidance on home loans and help you understand exactly what you’ll pay – including VAT or transfer duty. Get a free pre-approval to see what you can afford.

You can get pre-approved by contacting an expert at ooba Home Loans or by using our free, online pre-approval tool, the Bond Indicator.

Important: Every property purchase is different. Always work with a qualified conveyancing attorney who can confirm the exact taxes for your specific purchase.

This guide provides general information based on legislation as of October 2025. Property transactions involve complex legal and tax considerations. Always consult qualified professionals for your specific circumstances.