What Is Transfer Duty when buying a house?
It’s important to keep in mind that when buying a home, you’ll also need to budget for other costs. For extra costs related to the transaction, such as transfer taxes and bond costs, it is best to set aside 8 to 10% of the purchase price. The transfer of ownership of the property from the seller to the buyer is subject to a government tax. According to SARS, the transfer duty is a tax levied on the value of any property bought by anyone through a transaction or another means. Real rights in land, rights to minerals, fixtures, and shares or interests in residential property companies are all regarded as types of property that are subject to transfer duty.
How Do You Calculate the Transfer Cost?
The amount of the transfer duty is determined by SARS, and it is based on the property’s value rather than the selling price. However, it is simpler to come up with an estimate because, in the majority of cases, the selling price of the property will represent the property value. When a property is being sold within a family, where the selling price may be less than the actual value, this raises red flags for SARS. For a helpful estimate, use our transfer cost calculator.
To Whom Do You Pay the Transfer costs?
The estate agent or conveyancing lawyer who is in charge of transferring the property into your ownership will receive payment for the transfer fees. In South Africa, the conveyancing attorney is actually chosen by the seller, though the buyer is still responsible for paying the fee. Due to this, it can be more difficult to negotiate fees with the conveyancing attorneys, but there is no restriction on the buyer’s ability to suggest conveyancing attorneys. Just remember that the transfer duty expenses are separate from the conveyancing attorney’s fees.
“What Are the Transfer Duty Rates?”
Prior to March 2020, only properties worth up to R900 000 qualified for the transfer duty threshold. Since the transfer duty threshold was raised to R1 million, however, properties valued below that amount are no longer subject to transfer fees.
How Much Is the Transfer Cost on a House?: How Much Is the Transfer Cost on a House? | MortgageMarket. (n.d.). www.mortgagemarket.co.za. Retrieved October 17, 2022, from https://www.mortgagemarket.co.za/resources/articles/how-much-is-the-transfer-cost-on-a-house