One of the most frequent questions asked on the sale of a
property relates to the payment of capital gains tax.
Please note the following:
NO Capital Gains tax is payable on the sale of your primary
residence, provided you have not made a capital gain in excess of
one million, five hundred thousand (1 500 000) rand on the sale
Capital Gains Tax is NOT paid on registration of transfer of
your property the capital gain made on the sale of your property is
merely reflected on your income tax return for that particular tax
year, and becomes payable together with your income tax for that
The actual amount of capital gains tax payable, depends on your
As a private individual, your capital gains tax is calculated on
25% of the net capital gain made and will not exceed 10% of the
actual net capital gain made on the sale of the property.
If you purchase a property to renovate and sell within a short
period of time, you must be careful you may end up paying income
tax on the actual profit made as SARS may regard this as an income
generating activity an income tax rate of as much as 40% currently
apply to private individuals.
If you purchase property as a buy to let and renovate,
expenditure incurred in improving the property (e.g. a new pool)
will be deductible as a capital expense, and taken into
consideration when capital gains tax is calculated. However,
expenditure incurred in maintaining the property (e.g. repairs to
an old pool) will be deductible against the rental income as a
maintenance expense. In other words, when the property is
eventually sold, and provided your intention was to generate a
rental income, and not to speculate, you will only pay capital
gains tax on the capital gain made on the sale of the property,
after taking into account expenditure incurred which was not
claimed against rental income of the property from 1 October 2001
or date of acquisition if you acquired it after that date.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The expansion of the West African regional market to foreign investors, and the search for emerging markets has led to a continuous increase in business mobility and cross border investments with Nigeria.
Effective collaboration amongst government agencies, automation of processes and capacity building by tax authorities have always been identified by stakeholders as strategies for achieving an efficient tax system.
The major objective of the waiver is to promote voluntary compliance and consequently generate revenue for government which otherwise, could have been lost.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).