Capital gains tax when you sell property in South Africa

SARS taxes the gain you make when you dispose of an asset, and immovable property is an asset. So every property sale by a South African tax resident is a capital gains tax event, including the sale of the house you live in. That is not the same as owing tax. The exclusions do most of the work, and they are generous enough that the majority of ordinary family homes produce a CGT bill of zero.

Three things decide whether you owe anything: whether the property was your primary residence, how big the gain is once you have deducted everything the law lets you deduct, and who owns it. A home held in your own name is well protected. A rental flat, a holiday house, vacant land, or a house held in a company or an ordinary trust is not.

If you are not a South African tax resident you are still taxed on the gain on South African property, and the buyer's conveyancer must withhold a percentage of the price and pay it over to SARS as an advance. That is a separate mechanism with its own rules and its own paperwork. See selling property as a non-resident.

The first R3 000 000 of the capital gain on a primary residence is disregarded. Budget 2026 raised that from R2 000 000 with effect from 1 March 2026, and raised the annual exclusion from R40 000 to R50 000 at the same time. It is not a lifetime allowance. It applies to each disposal of a primary residence, so a seller who moves three times gets it three times, but you can only treat one residence as your primary residence at any given moment.

To qualify, an interest in the residence must be held by a natural person or a special trust, and you or your spouse must ordinarily reside in it as your main residence and use it mainly for domestic purposes. Land goes with it up to a maximum of two hectares, provided that land is used mainly for private purposes together with the house and is sold to the same buyer at the same time. A smallholding larger than two hectares is therefore partly excluded and partly not.

• The R3 000 000 is per residence, not per owner. Where more than one person holds an interest, the exclusion is apportioned in proportion to those interests. Spouses married in community of property are each treated as disposing of half, so each gets half the exclusion. One house, one R3 000 000, split between you.
• The R50 000 annual exclusion is per person, and it applies to your total capital gains for the year, not just the house. Two spouses each have their own.
• A house in a company or an ordinary trust gets neither exclusion. No primary residence exclusion, no matter who lives in it, and no annual exclusion. Both belong to natural persons and special trusts only.

The gain is the selling price less your base cost. Base cost is not simply what you paid. It is what the property cost you across the whole period you owned it, restricted to the categories the Eighth Schedule allows.

The distinction that costs sellers real money is improvement against repair. A capital improvement is added to base cost, and it must still be reflected in the state of the property when you sell. A repair is not, no matter how necessary it was. Replacing a burst geyser with an identical geyser is a repair. Adding a bedroom, a garage or a second bathroom is an improvement. Keep those invoices for as long as you own the house, because SARS wants proof, not an estimate.

The other surprise is bond interest. Years of interest on the bond that bought the house do nothing for your base cost, and neither do the bond registration and cancellation costs. Those are borrowing costs, and they are excluded by name.

If you bought before 1 October 2001, when CGT started, you are not taxed on the growth before that date. You establish a valuation date value using one of the methods SARS permits: a market value at 1 October 2001, a time-apportionment calculation, or a rule that sets the value at 20% of the proceeds after your post-2001 costs. Which one gives the best answer depends on your numbers, so on a property held that long it is worth having someone run all three.

A house bought for R1 200 000, improved along the way, and sold for R3 400 000. The same numbers produce very different answers depending on whether you lived in it.

Watch where the commission sits. Agent commission is an incidental cost of disposal, so it comes off the gain rather than sitting on top of the tax. Selling privately, with no commission to deduct, leaves a slightly larger taxable gain on a property that is not your primary residence. The rest of the seller's costs are in the cost of selling.

As a primary residence the whole R1 709 500 gain in that example falls inside the exclusion and nothing is payable. As a rental flat it produces R258 882, which is 15.14% of the gain and 7.61% of the selling price. The step that gets you there is the 40% line.

CGT is not a separate tax with its own rate. A percentage of your net capital gain is added to your taxable income and taxed at whatever rate applies to you. That percentage is the inclusion rate, and it is the biggest structural difference between owning property personally and owning it through an entity.

An ordinary trust selling a house pays up to 36% of the gain, twice what an individual pays at the very top of the scale, and it does so with no primary residence exclusion and no R50 000 annual exclusion. A company sits between the two at 21.6%, and the proceeds then still have to get out of the company to reach you, which is its own taxable step.

That does not make a trust the wrong structure. Trusts are used for estate planning, creditor protection and succession reasons that have nothing to do with CGT, and those reasons are often good ones. It does mean that if someone proposes moving your family home into a trust or a company, the CGT on the eventual sale belongs in the conversation alongside the transfer duty and the cost of the move itself. Get that advice from a tax practitioner before the transfer, not after.

The primary residence exclusion is apportioned wherever the property was not wholly and continuously your home. These are the cases that come up most.

• Part of the house used for trade. If you ran a business from a room and claimed it against your income tax, the gain is split between the domestic portion and the trade portion, and only the domestic portion gets the exclusion. The apportionment usually follows floor area.
• Periods you were not ordinarily resident. The gain is apportioned over your ownership period, and the years the property was not your primary residence do not get the benefit.
• Absences the law forgives. You are treated as still resident for up to two years if the house was on the market and you had vacated it for a new primary residence, if it was being built, or if it was accidentally made uninhabitable. Separately, a period of up to five years while the house is let can still count, provided you did not treat another residence as your primary residence, you lived there before and after, and you were either temporarily out of the country or working more than 250 km away.
• Inherited property. Death is its own disposal, assessed against the deceased with a larger annual exclusion of R440 000 in that final year, and the heir takes a base cost reset to the market value at the date of death. See selling an inherited house.

CGT falls due long after the sale, which catches sellers who have already spent the proceeds. There is no CGT invoice at registration and the conveyancer does not deduct it, unless you are a non-resident.

The date that matters is the date of disposal, not the date the transfer registers at the Deeds Office. If the sale agreement is subject to a suspensive condition, and most are because most buyers are getting a bond, the disposal happens on the day that condition is met. If there is no suspensive condition, it is the day the agreement was concluded. That date fixes which tax year the gain falls into, and the tax year runs from 1 March to the end of February.

That is why the 1 March 2026 increase is worth checking against your own dates. A sale that became unconditional before then uses the older R2 000 000 exclusion even if the transfer only registered months afterwards.

You declare the disposal in your income tax return for that year and settle it on assessment. If you are already a provisional taxpayer, the taxable capital gain has to be built into your provisional estimates, and the second period estimate at the end of February is where an underestimate starts attracting penalties. Either way the cash can be due more than a year after you handed over the keys, so put it aside on the day the money lands.

This is general information, not tax advice, and a property CGT calculation is fact-dependent in ways a guide cannot settle. A tax practitioner earns the fee quickly in any of these situations.

• You bought before 1 October 2001 and need the valuation date value chosen properly.
• The property was your home for part of the time and a rental for the rest.
• It is held in a trust or a company, or jointly with someone you are not married to.
• You claimed a home office, or any other part of the property, against your income tax.
• You are not a South African tax resident, or you are emigrating.