|All contracts to acquire immovable property must be in writing, and signed
by both buyer and seller.
Estate Agents will draw up this contract which is called an Offer to
Purchase. Once signed this
constitutes a valid and legally binding contract from which neither party
can withdraw without incurring legal
consequences, save for certain instances where the agreement is subject to
which are either fulfilled/not fulfilled.
Mortgages for Non-residents
A non-resident may only borrow up to a maximum of the amount he invests into
of the property, which translates into a 50% loan. There is a registration
cost levied on Bonds
which is dependent upon the value.
Transferring the property from Seller to Buyer
The registration of property is completed by a specifically qualified legal
known as a conveyancer. It is customary for the Seller to appoint the
and the Purchaser to pay the costs. The conveyancer prepares the transfer
which, after signature by the Purchaser and Seller, is lodged together with the
cancellation of any existing mortage bonds
and new mortage bonds to be registered in a regionally located Deeds
Registry. The deeds are subject to an examination
process whereafter they are made available for registration. On date of
registration of transfer all existing mortage bonds
registered over the property are cancelled simultaneously with the
registration of any new mortgage bonds by
the Purchaser in favour of the bank granting financial assistance. The
Purchaser is recorded as the new owner
of the property and the purchase price is paid to the Seller
The Purchaser is responsible for the payment of these fees unless purchasing
directly from a developer whereby by developer is VAT registered. Transfer
is payable to the Receiver of Revenue.
Commission is payable where an estate agent is the effective cause for
concluding a sale of
the property. It is customary that the Seller is responsible for this fee.
All funds introduced from outside South Africa to acquire fixed property
South Africa may be repatriated together with any profit on resale of the
property. It's not law, but facilitates the repatriation of funds, if the title deed is endorsed "non resident".
Capital Gains Tax
Capital Gains Tax (CGT) became effective on 1 October 2001 and South African
residents are liable for the payment of Capital Gains Tax (CGT) on the
disposal of any asset from that
date, subject to certain limited exceptions. Non-residents are only liable
to pay CGT
on the disposal of the following: Immovable property situated in South
any right or interest in immovable property. Assets of a permanent
establishment of a non-resident through which trade is carried on in SA.
- With individuals; 25% of the Gain is taxable in their hands for
the tax year in which it is disposed. The first R1.5 million Gain is exempt
from CGT if the
property is the primary residence of the individual. This Rebate does not
apply to non-residents.
- With Juristic persons (Companies, Closed Corporations); 50% of the Gain
is taxable in the hands of the Juristic person for the tax year in which it
is disposed. Companies are taxed at
a flat rate of 28%. In addition thereto one must bear in mind the secondary
tax on Companies (STC)
which can become payable on the dividends payable to Shareholders and
- With Trusts, 50% of the Gain is taxable in the hands of the Trusts for the
tax year in which it is disposed.
Trusts are taxed at a flat rate of 40%.
Whilst every care has been taken in providing the above guide lines, the appropriate proffessional person, should be employed.