Transfer Duty in South Africa

What is transfer duty?

Transfer duty is a tax levied on the acquisition of immovable property in South Africa under the Transfer Duty Act 40 of 1949. It is administered by the South African Revenue Service (SARS) and is payable by the acquirer — the buyer, donee, or whoever ends up as the new owner. The duty is calculated on the fair market value of the property or the purchase price, whichever is higher. That “higher-of” rule matters: even if a property is sold below market value (in a sale between related parties, for example), SARS can assess transfer duty on the higher market figure.

Transfer duty applies to the acquisition of any interest in land, not only to outright purchases. Usufructs, fiduciary rights, bare dominium and certain other real rights all fall within the net. And it is a hard gatekeeper in the transfer process: the transfer cannot be registered at the Deeds Office until SARS has issued the transfer duty receipt (or certified an exemption). In practice, the conveyancing attorney collects the duty from the buyer as part of the transfer costs, declares and pays it to SARS, and only then lodges the transfer documents for registration.

Current SARS transfer duty rates

Transfer duty is calculated on a progressive sliding scale that applies to different portions of the property value. The structure is similar in principle to income tax brackets: only the slice of the value that falls into each bracket is taxed at that bracket’s rate, and the effective rate rises with value but never reaches the top marginal rate across the whole price. The table below reflects the rates applicable to all acquirers (natural persons, companies, close corporations and trusts) under the table currently in force.

Rates effective from 1 April 2025 (unchanged for the 2026/2027 year)

Source: SARS — Transfer Duty. The SARS page holds the live table.

The rate table applies uniformly to all acquirers — natural persons, companies, close corporations and trusts. Before 23 February 2011, juristic persons paid transfer duty at a flat rate of 8%, but since that date the unified sliding scale has applied regardless of buyer type.

The no-transfer-duty threshold

A natural person — any individual buyer, South African or foreign, buying in personal name — pays no transfer duty on property valued at R1,210,000 or less. The threshold exists to ease the cost of entry-level home ownership, and it applies per transaction. A buyer who purchases two separate properties, each below the threshold, pays zero duty on both.

To put it in concrete numbers: a buyer who acquires a home for R900,000 pays R0 in transfer duty. The same buyer paying R1,210,000 still pays R0. Only the slice of the price above R1,210,000 attracts duty, and even then only at 3% in the first bracket.

The threshold is the single biggest relief for entry-level buyers. A R1,210,000 home attracts zero transfer duty — for individuals, companies and trusts alike, since the unified sliding scale gives every acquirer the same zero-rated bracket.

Who pays transfer duty?

Transfer duty is the legal obligation of the acquirer — the party taking ownership. The seller has no transfer duty liability, although timely payment matters to the seller too, because the transfer cannot be registered, and proceeds therefore cannot flow, until SARS has issued the receipt.

The rate structure and available reliefs depend on who the acquirer is:

• Natural persons. Individual buyers — whether South African citizens, permanent residents or foreign nationals — are taxed under the sliding-scale table, starting with the R1,210,000 zero-rated bracket.
• Companies and close corporations. The same sliding scale applies. The historical 8% flat-rate regime for juristic persons was abolished with effect from 23 February 2011, unifying the rate table across all acquirer types. A company acquiring a R900,000 property pays R0 transfer duty, the same as an individual.
• Trusts. The unified sliding scale also applies to trusts. Both inter vivos and testamentary trusts acquiring property through purchase are taxed under the same table.
• Foreign buyers. No foreign-buyer surcharge exists in South African transfer duty law. A non-resident buyer pays at the same rates as a local buyer. Exchange-control approvals under the SA Reserve Bank, and SARS non-resident registration, apply separately.

Some transfers do not trigger a duty liability at all — inter-spousal transfers and divorce-order transfers are exempt under s 9(1)(i) and s 9(1)(k) (regardless of matrimonial regime since 25 July 2006), inheritances from deceased estates are exempt under s 9(1)(e), and transfers to or by government are exempt under s 9(1)(a)–(bB). These are statutory exemptions that must be claimed at the point the TDC01 declaration is lodged — they are not “non-acquisitions”, and they are covered in detail under Exemptions below.

Buying property through a company, CC, or trust

The Transfer Duty Act treats the acquisition of shares in a “residential property company”, a member’s interest in a close corporation that holds residential property, or certain changes to a discretionary trust that holds residential property, as if the underlying house had been sold. Under the s 1(1) definition, a residential property company is a company (or CC) whose residential property holdings make up more than 50% of its aggregate asset value — ignoring financial instruments, Krugerrands, and liabilities like bonds. The indirect acquisition triggers duty under s 2(1), and loans and leases are disregarded when calculating fair value (paragraph (b) of the “fair value” definition). Public officers and sellers of such shares/interests can be held jointly and severally liable for unpaid duty under ss 3(1A)/(1B), so simply hiding a house inside a corporate wrapper does not shift the risk. REITs listed on the JSE are carved out of this rule — trades in REIT shares are not subject to transfer duty (from 11 December 2013).

Transfer duty vs VAT

The single most important interaction to get right on a South African property transaction is the one between transfer duty and VAT. The rule is simple and unforgiving: the two taxes are mutually exclusive. A property transaction attracts either transfer duty or VAT — never both.

VAT applies where the seller is a VAT-registered vendor selling in the course or furtherance of their enterprise. The most common examples are property developers selling newly-built residential stock, commercial landlords selling income-producing property, and businesses selling industrial or retail real estate. In those cases, VAT at the standard rate of 15% is charged on the price, and transfer duty falls away entirely. The reverse is also true: the overwhelming majority of residential transactions — private-treaty sales between individuals — attract transfer duty and no VAT, because neither party is selling in the course of an enterprise.

The financial stakes are significant. Take a property sold at R5,000,000. If the seller is a VAT vendor, the VAT component of a VAT-inclusive price at that level is approximately R652,174 (15/115 of R5,000,000). If instead transfer duty applies, the duty at R5,000,000 works out to R327,356 — that’s R106,784 (cumulative base through the R2,994,800 bracket) plus 11% of the R2,005,200 slice above it. The nominal tax difference runs into hundreds of thousands of rands. That said, a VAT-registered buyer may be able to claim the input VAT back depending on the intended use of the property, which can flip the economics. The point is simply that the tax treatment is never trivial, and the seller’s VAT status must be established before the offer is signed. The offer to purchase should record the position clearly — whether the price is VAT-inclusive, whether transfer duty is payable by the buyer, and on whose account any shortfall falls if the categorisation changes.

Exemptions

The Transfer Duty Act and related legislation carve out a number of categories where transfer duty is not payable, or is payable at a reduced amount. The commonly encountered ones:

• Natural-person threshold (R1,210,000) — s 2(1) read with the rate table in the Act’s annexure. Individual buyers pay zero duty on property valued at or below R1,210,000. In substance, this is a statutory exemption for entry-level residential buyers.
• VAT-vendor sales — s 9(15) Transfer Duty Act. Where VAT applies to the sale (see Transfer duty vs VAT above), no transfer duty is payable. The two taxes never stack. Note the private-residence nuance: a VAT vendor selling their private residence is usually acting outside the “enterprise”, so the sale falls back into the transfer duty net rather than VAT.
• Inter-spousal transfers and divorce-order transfers — s 9(1)(i) and s 9(1)(k). Since 25 July 2006, transfers of property from a deceased or divorced spouse to the surviving or divorcing spouse are exempt regardless of matrimonial regime (in community, out of community with or without accrual, civil unions, same-sex partnerships). Section 9(1)(k) separately exempts the automatic half-share that accrues to the other spouse by operation of law on marriage in community of property. The exemption under s 9(1)(i) applies only to transfers recorded in the court order or a settlement agreement endorsed by the court.
• Inheritance from deceased estates — s 9(1)(e). Two scenarios have to be kept apart: (a) redistribution during estate liquidation — transfers to heirs, legatees or surviving-spouse redistributions under a redistribution agreement are exempt, even where equalisation amounts from outside the estate are introduced (Lubbe v CIR; SIR v Estate Roadknight); and (b) a descendant purchasing property from the wound-up estate — that is a dutiable acquisition on the consideration paid.
• Government and municipal transfers — s 9(1)(a), (b), (bB). Separate exemptions cover national and provincial government (s 9(1)(a)), municipalities (s 9(1)(b)), and designated water service providers (s 9(1)(bB)). The relief extends to certain statutory bodies performing governmental functions.
• Corporate restructuring relief — s 9(1)(l) and s 9(15A). Section 9(1)(l) exempts acquisitions undertaken in terms of asset-for-share (s 42 ITA), substitutive share-for-share (s 43 ITA), amalgamation (s 44 ITA), intra-group (s 45 ITA) and liquidation-distribution (s 47 ITA) transactions. A separate s 9(15A) exemption applies where s 8(25) VAT Act deems the parties to be one person (typically an asset-for-share). Relief is subject to a sworn affidavit from the public officer confirming the underlying ITA conditions are met, and these provisions are tightly drafted and anti-avoidance sensitive — take tax advice before relying on them.
• Approved Public Benefit Organisations — s 9(1)(c) linked to s 30(3) Income Tax Act. PBOs approved under s 30(3) ITA acquiring property for use in their approved public benefit activities are exempt, provided the property is used exclusively for the qualifying purpose. Using the property for non-qualifying activities can trigger a claw-back. Statutory bodies (s 9(1)(d)) and inter-PBO transfers (s 9(1A)) are covered by adjacent exemptions.

Worked examples

The examples below show how the sliding scale compounds across brackets for three typical purchase prices. All three assume a natural-person buyer and a non-VAT-vendor seller, so transfer duty applies.

How transfer duty is paid

Transfer duty must be paid within six months of the date of acquisition. For the typical residential sale, the “date of acquisition” is the date the last party signed the agreement of sale — not the date the agreement became unconditional, and not the date a suspensive condition (bond, sale-of-existing-home, zoning consent) was fulfilled. Under s 1(1) of the Transfer Duty Act and the SARS Transfer Duty Guide (paragraphs 2.3.1 and 2.3.3), the 6-month clock runs from the signing date regardless of whether a suspensive or resolutive condition has been met. The only common exception is an option to purchase or a right of pre-emption — there, the clock starts when the option is exercised. Different rules apply to divorce, inheritance and prescription (see the Exemptions section).

1. Agreement signed. The six-month clock starts from the date the last party signs the sale agreement — not the date the agreement becomes unconditional. The conveyancer prepares the transfer documentation and calculates the duty payable.
2. TDC01 declaration prepared. The conveyancer prepares the transfer duty declaration (TDC01), setting out the parties, the property, the consideration and the basis for any claimed exemption.
3. Buyer pays into trust. The buyer deposits the transfer duty — along with conveyancing fees and other transfer costs — into the conveyancer’s trust account. This is triggered by the conveyancer’s cost statement.
4. Electronic submission via SARS eFiling. The conveyancer lodges the TDC01 and pays SARS electronically. The process is fully digital.
5. Transfer duty receipt issued. Once SARS confirms payment and is satisfied with the declaration, it issues the transfer duty receipt. The Deeds Office will not accept the transfer without it.
6. Deeds Office lodgement. With the receipt in hand, the conveyancer lodges the transfer documents. Registration follows examination by the Deeds Office.

Miss the six-month deadline and SARS imposes interest at 10% per annum on the outstanding duty, calculated for each completed month from the effective date (the day after the six-month period ends) until the date of payment (s 4(1A) Transfer Duty Act). This is not a penalty — the wording changed from “penalty” to “interest” on 1 March 2005. A separate understatement penalty (under Chapter 16 of the Tax Administration Act, up to 200% of the shortfall) may be imposed if SARS finds the duty was under-declared through default, omission, or incorrect statement on the return (ss 222–223 TA Act). Just as critically, the Deeds Office will not register the transfer until a valid transfer duty receipt is produced.

Frequently asked questions