There certainly are costs to consider when buying a property. We cover to a large extent, what transfer duty is, which applies to properties bought for over R1m. Private Property recently outlined in detail a little more about transfer duty. Here, we also cover all the costs to consider when buying or selling a property.
What is Transfer Duty?
SARS defines transfer duty as a tax that is levied on the sale of a fixed property. This tax is payable to SA Revenue Service (SARS) when the property is transferred from the existing owner to the new owner.
When you buy a property and you become a new owner, you will be liable for the transfer duty in addition to the sales price you agree. This and other costs like conveyancing fees. More about the transfer process.
Transfer duty is based on value, not price!
Transfer duty is based on the value of a property, not the price. SARS regards the purchase price to be the same as the value of the property. But in some instances, SARS considers the purchase price to be different from the true value of a property. This may happen when a property is sold to someone you know, (friend or family) and the value is understated. Transfer duty will always need to be paid on the true value of a property.
In early 2021 the budget speech included an important amendment to the transfer duty calculation. This is relevant to all property transactions. And this increases the threshold under which transfer duty is not payable. This threshold increased to R1 million, up from R900,000. This means that if you buy a property that costs R1 million or less, you will not have to pay transfer duty. You will however be liable to other transfer and conveyancing fees.
Transfer duty table payable:
- R0 to R1,000,000: 0%.
- R1,000,001 to R1,375,000: 3% above R1,000,000.
- R1,375,001 to R1,925,000: 6% of the value above R1,375,000 (R11,250).
- R1,925,001 to R2,475,000: 8% above the value of R1,925,000 (R44,250).
- R2,475,001 to R11,000,000: 13% above the value of R11,000,000 (1,026,000).
15% VAT or transfer duty?
Also, it’s important to remember that a property transaction cannot be subject to both VAT and transfer duty. If you are buying a new home from a developer who is a VAT vendor then you will be liable for VAT. Remember to ask your developer if they are a VAT vendor. Also, remember to check your OTP for any hidden costs.
What properties are exempt from transfer duty?
Private Property covers this in more detail but the following considerations are exempt from paying transfer duty.
- Canceled transactions.
- Marriage in community of property.
Costs when buying a property
- Transfer costs or transfer duty.
- Conveyancer fees.
- FICA costs.
- Bond costs include a deposit to secure a better interest rate with the bank.
Selling a property? What costs can you expect?
- Bond cancellation fees: levied by the bank (penalties for cancellation of the bond).
- Bond settlement amount: – the amount that is outstanding on the bond with the bank.
- Compliance certificates: could include (Gas Compliance, Electrical Compliance, and Electric Fence compliance. Remember that each certificate (x 3) will cost around R1,500 and will exclude any additional work that may be required to get your property up to the required, legal standard.
- Commission: and VAT at 15% is payable above the commission rate you agree with an agent.
- FICA: budget on around R900.00 + VAT.
- Legal fees: +/-R 4,500.00 per bond registered – The bank will instruct the relevant attorneys to do this.
- Levies: If you are selling a property in a sectional title complex, remember you are responsible for all the levies until the transfer of ownership takes place. Remember if you are in arrears, we can arrange with the conveyancing attorneys to settle the arrears portion with the proceeds of the sale.
- Rates and Taxes: As the seller of a property you are responsible/liable for all rates and taxes on the property until ownership is transferred. A Rates Clearance Certificate will be required at a cost of +/- R 1,500.00.
How can we help?
- If you need more assistance to identify the costs when buying a property let us know.
- Also, if you need assistance to identify the costs when you sell a property let us know.
- If you are looking to sell your property and need to know what your property is worth, let us get you in touch with a top estate agent in Randburg.
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So, if you need a valuation done on a property anywhere in Randburg or elsewhere in Jhb, we can help. Give us a call on telephone number (064) 549-3123. Alternatively, drop us an e-mail at email@example.com. We have a vast network of almost 1,500 top Keller Williams agents at our fingertips who are all just dying for the opportunity to partner with you to sell and conclude your property transaction in record time.
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