Budget for property transfer costs
When it comes to properties valued more than R1-million, buyers are liable for transfer duties which is payable within six months of the purchase. Failure to pay will incur penalties.
If you are a first-time home-buyer, there are many things you need to know when it comes to buying your first property.
For many, buying their first home is a daunting experience with tons of paperwork and challenges before they get to make a property their home.
One of the most important things to keep track of is transfer duties, a tax levied on the value of a property regardless of how it was acquired. This is paid to the South African Revenue Service (Sars).
Transfer duties must not be confused with property transfer costs. Transfer costs are paid to conveyancing attorneys who attend to the transfer of a property between the seller and buyer.
But how much should one pay to Sars when it comes to transfer duties?
A transfer duty is only payable on properties which are valued at more than R1-million. However, you will still need to pay property transfer costs.
When it comes to properties valued at over R1-million, buyers are liable for the amount above that and is payable within six months of the purchase. Failure to pay will incur penalties.
It should be noted that the percentage of transfer duties increases the higher the value of the property you are buying is. It ranges from three percent to as high as 13 percent, which is the cap.
If a property is inherited from a deceased person, regardless of the relationship with the heir, they are exempt from paying transfer duty fees. That being said, the heir or beneficiary would still need to compensate conveyancing attorneys for property transfer fees.
Developers often waive transfer duties irrespective of the property’s value in new developments. In these cases, buyers pay Value Added Tax (VAT) which is often already factored into the purchase price of the property.
It should be noted that the law stipulates that at no point may both VAT and a transfer duty be applied at the same time. It is also best practice to verify that a seller is VAT registered, which could see you not paying transfer duty fees.
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