The latest changes to transfer duty, announced in the Budget Speech, will take effect from 1 April 2025. These new rates apply to property transactions that are not subject to VAT. Understanding these changes is essential for buyers and sellers navigating the property market.
What is Transfer Duty?
Transfer duty is a government tax payable when purchasing property. It applies to land, buildings, real rights in land, mineral rights, shares in residential property companies, and share-block schemes. The amount of transfer duty payable depends on the property’s value, calculated using a progressive tax system.
New Transfer Duty Rates from 1 April 2025
Under the revised transfer duty structure, the following rates will apply:
Property Value: R1 – R1,210,000 → No transfer duty payable.
Property Value: R1,210,001 – R1,663,800 → 3% of the amount exceeding R1,210,000.
Property Value: R1,663,801 – R2,329,300 → R13,614 plus 6% of the amount exceeding R1,663,800.
Property Value: R2,329,301 – R2,994,800 → R53,544 plus 8% of the amount exceeding R2,329,300.
Property Value: R2,994,801 – R13,310,000 → R106,784 plus 11% of the amount exceeding R2,994,800.
Property Value: Above R13,310,001 → R1,241,456 plus 13% of the amount exceeding R13,310,000.
What These Changes Mean for Property Buyers
These adjustments reflect changes in the property market and inflationary trends. Notably, the transfer duty exemption threshold has increased from R1,100,000 to R1,210,000, which means buyers purchasing properties below this value will pay no transfer duty. This change provides relief for first-time homebuyers and reduces upfront costs when entering the market.
How to Calculate Your Transfer Duty
To determine the transfer duty on a property purchase, follow these steps:
Identify the applicable price bracket.
Apply the base amount and percentage rate for the value exceeding the bracket’s lower limit.
Sum the amounts for an accurate total.
Example Calculation:
If you are purchasing a property for R1,800,000, the transfer duty is calculated as follows:
The first R1,210,000 is exempt.
The next R453,800 (R1,663,800 - R1,210,000) is taxed at 3% = R13,614.
The remaining R136,200 (R1,800,000 - R1,663,800) is taxed at 6% = R8,172.
Total Transfer Duty Payable: R13,614 + R8,172 = R21,786.
Additional Costs to Consider
While transfer duty is a major cost in property transactions, buyers should also consider:
Conveyancing Fees – Fees charged by attorneys handling the property transfer.
Deeds Office Fees – Charges for registering the property in the buyer’s name.
Compliance Certificates – Necessary certifications (e.g., electrical, plumbing) before the transfer process can be completed.
Final Thoughts
With these new transfer duty rates coming into effect from 1 April 2025, buyers and sellers must stay informed to plan their property transactions effectively. The increased exemption threshold provides welcome relief for lower and mid-range property buyers, making homeownership more accessible. Understanding these costs in advance can help avoid surprises and ensure a smooth property transfer process.
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