Foreign sellers have to pay 5% (or more) Capital Gains Tax

Although South African property laws are widely regarded as progressive and encouraging to foreign investors, buyers from overseas can be surprisingly ignorant about the terms and conditions under which they own their properties, says Lanice Steward, MD of Anne Porter Knight Frank.

In particular, says Steward, she has more than once had to remind non-resident owners that if they sell any property at a price of R2 million or more, they (or their attorneys) have to pay capital gains tax 5% of the sale price to SARS on transfer.

If the property is owned by means of a company or a trust the capital gains tax is 7,5% and 10%.

Non-residents should register with SARS and get an income tax number when they decide to sell. Once this is done, said Steward, it is possible for non-resident sellers to apply to SARS for their capital gains tax to be calculated on the individual rate (5%). If sellers contact SARS timeously, they will be given a tax number (if they do not have one already) and can then apply for a re-assessment of capital gains on their property.

“The savings here can be very significant,” said Steward.

Article from: www.anneporter.co.za