Everything you need to know about transfer duties

Buying a new home is an exciting undertaking - and it's also one that comes with a number of costs. One of the costs that you'll have to think about - if the price of the property you're buying is more than R1 000 000 - is transfer duties. Jawitz Properties explains what transfer duties are, how much you'll need to pay and when you could be exempt from paying transfer duties.

First things first: what are transfer duties?

Simply put, transfer duties are an additional cost that you'll need to factor into your budget when buying a property. It is a tax payable to the South African Revenue Service (SARS) when a property is transferred from its previous owner's name into your name.

The difference between transfer duties and transfer of property costs

It's important to not confuse transfer duties with transfer of property costs. Transfer duty is a tax that you pay to SARS when you acquire immovable property. Transfer of property costs are fees that you pay to the attorney who transfers the property into your name. You will have to pay for transfer of property costs regardless of the value of your property.

How much will you have to pay?

The easiest way to calculate exactly how much you'll have to pay SARS for transfer duties is to use ooba's handy transfer costs calculator. Simply input your purchase price, loan amount, whether your future home is a freehold property or part of a sectional title and your status as a purchaser (typically, this will mean stating that you are a "natural person" rather than a business) and ooba will tell you how much you'll need to pay for transfer duties and property transfer costs.

The amount of transfer duty levied by SARS can change from one financial year to the next, and the good news for many first-time buyers is that there is a transfer duty-free threshold that is currently set at R1 000 000. This means that if you're buying an apartment (or another type of property) for under that amount, you will not have to pay transfer duties. According to SARS tax rates, if the property you are buying costs between R1 000 001 and R1 375 000, then the transfer duty that you have to pay will be 3% of the value of your property above R1 000 000. On the opposite side of the spectrum, if your property is valued at R11 000 001 or higher, your transfer fees will be R1 026 000 as well as 13% of the value exceeding R11 000 000. Make sure you're familiar with the full set of rates so you know what you are going to have to pay.

When are transfer duties not payable?

There are occasions when a property can be transferred without the new owner having to pay transfer duties. This includes the following circumstances:

• If you inherit property, you will not have to pay transfer duties. This applies no matter what your relationship with the deceased person was.

• If you marry someone (in community of property) who owns property, you automatically become the owner of half that property.

• If a property is awarded to you as part of a divorce order, you will not need to pay transfer duties. However, if an agreement regarding a property is reached outside of the official divorce proceedings, transfer duties will be payable.

• If you are buying your property off-plan, you will never pay transfer duties. You will pay VAT, but this will be built into the property's selling price.

Understanding transfer duties and all the other costs involved in buying real estate can be daunting - whether or not you're doing it for the first time. Your Jawitz Properties #RealPartner will walk you through every step of the process of becoming a homeowner. Contact us today and let us find and secure you the home of your dreams.