Author: Andrew Jackson
What is Transfer Duty?
It is a Tax levied on the value of any property acquired by any person by way of a transaction or in any other way in the Republic of South Africa. For the purpose of this article, property can mean including but not limited to land which includes real rights in land, a share or interest in a residential property, a share in a share-block company or rights to minerals. It should be noted that transfer duty and the transfer costs payable are separate amounts which needs to be paid when an attorney is attending to the transfer of your property.
When is Transfer Duty applicable?
Transfer duty is payable when the value of the property being transferred is above the value of R1 000 000.00 (One Million Rand). This threshold has been effective from 1 March 2020. In relation to portions/shares of a property being transferred, even though the value of the property might be below the abovementioned threshold, transfer duty might nonetheless be calculated on the full value of the property. There are, however, certain transactions that are exempt from transfer duty. These exemptions are set out in Section 9 of the Transfer Duty Act, Act No. 40 of 1949.
Who pays Transfer Duty?
Transfer duty will be payable by the person acquiring the property. Where benefits are being renounced, the person in whose favour or for whose benefit said interest or benefit is being renounced shall be liable to pay transfer duty upon the disposal of the property. Transfer duty can be calculated on the SARS website https://www.sars.gov.za/TaxTypes/TransferDuty/Pages/default.aspx.
When is Transfer Duty payable in relation to a Transfer?
Transfer duty is payable within 6 months of the date of acquisition of the property. Therefore in order for a transfer to be registered, transfer duty will have to be paid to SARS upfront and thereafter SARS will issue the Transfer Duty Receipt. If any duty remains unpaid after the expiration of the said six months period, from the date of acquisition, interest shall be payable at a rate of 10% per annum on the amount of duty which remains unpaid. It is important to note that transfer duty which is currently levied may be subject to change as per the directives issued by SARS.