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Frequently Asked Questions
What is the difference between VAT and Transfer Duty when buying a property?
Most of the time, Transfer Duty is the tax paid on immovable property. You do not pay both VAT and Transfer Duty – these taxes are paid to the government.
To work out whether VAT or transfer duty is payable, check the seller’s status: if the seller is registered for VAT, then VAT is payable on the transaction and no transfer duty is payable by the buyer. If the seller is not registered for VAT purposes, then transfer duty is payable on the transaction by the purchaser.
What is Occupational Rental?
If you move into your new property before it has been legally transferred into your name, you will be liable for a rental known as Occupational Rental. The monthly amount will be specified in the Offer to Purchase.
Most buyers do not want to occupy a property before it is legally theirs, nor do sellers want occupation of their premises before it is no longer theirs. It is common practice to occupy the property once the new owner has taken transfer.
What additional home ownership costs should I consider?
Homeowner’s insurance; municipal rates and taxes, water and electricity, property maintenance, and security. If it’s a sectional title property, you will have monthly levies.
When is VAT used instead of Transfer Duty?
With an immovable property purchase, VAT is only levied if the Seller is a registered VAT vendor, otherwise, Transfer Duty is the duty paid. A transaction cannot be subject to both VAT and Transfer Duty; it is either one or the other, and VAT always takes preference.
How is Transfer Duty calculated?
It depends on the purchase price of the property.
|Value of the property (R)||Rate|
|0 – 1 000 000||0%|
|1 000 001 – 1 375 000||3% of the value above R1 000 000|
|1 375 001 – 1 925 000||R11 250 + 6% of the value above R 1 375 000|
|1 925 001 – 2 475 000||R44 250 + 8% of the value above R 1 925 000|
|2 475 001 – 11 000 000||R88 250 + 11% of the value above R2 475 000|
|11 000 001 and above||R1 026 000 + 13% of the value exceeding R11 000 000|
Note – applicable to properties purchased on or after 1 March 2020
What is Transfer Duty?
Transfer Duty is a government tax that is charged when a property is transferred from one person to another. This tax or duty is paid by you, the purchaser, to the Transferring Attorneys, who pay it to the South African Revenue Service (SARS) when the transfer goes through.
Currently, there is no transfer duty on a property priced under R1 000 000.
How do attorneys manage your property deposit?
Attorneys hold your money in trust while waiting for the bond registration and transfer of the property. The interest which accrues while your money in trust, is for your benefit.
Is there a specific amount requested for the deposit?
No, but a deposit can be 10 percent, but more likely between 20 and 30 percent of the property price. It will also depend on the amount the bank will extend to you as a loan – if there’s a shortfall between the property’s price and the loan, you will need to bridge that gap.
Is the deposit used to cover any of the costs?
No. Your deposit is the initial payment you make to secure the purchase of the property. It’s not intended to pay any of the extra costs involved in buying a property.