Property tax in South Africa

Property tax in South Africa encompasses a range of different kinds of taxes levied on property. These include municipal rates, tax on rental income, and property sales tax.

All property owners, unless specifically exempted from doing so, are obligated to pay these taxes to the relevant government entity. Certain property types and ownership types may receive tax rebates. Certain tax rates vary across jurisdictions in South Africa.

Rates in South Africa refer to municipal property taxes that are billed at the local level each year, based on a property's assessed value. These rates are used as part of municipalities' annual budgets, to fund their operations and infrastructure projects. Property owners pay rates directly to municipalities, and are billed for such on a monthly basis. Certain municipalities operate online systems for this billing.^[1]

Municipalities often appoint professional valuation firms to conduct the assessments which, by law, must take place every four to five years, so that valuations can be updated. Municipal property valuations are distinct from bank valuations and real estate market valuations, both of which serve entirely different purposes.^[2]

As per the Municipal Property Rates Act of 2004 (MPRA), municipalities in South Africa are obligated to collect rates from property owners. Municipalities set their own rates bylaws, aligning them with their specific finances and strategic objectives.^[3]

Income derived from renting a property (generally residential in nature) to a tenant attracts tax in South Africa, which is paid to the South African Revenue Service (SARS).^[4]

Residential accommodation includes:^[4]

• Investment properties bought for the purpose of renting to tenants
• Renting out a portion of the home in which one resides
• Holiday homes
• Guesthouses

When filing income tax each year, property owners are obligated to add the rental income they receive to any other income they receive. Each rental property's income, if an owner has more than one, should be declared separately. All rental properties should be included, regardless of whether the owner made a profit or loss on the particular property.^[5]

The rental income portion may be reduced by certain permissible expenses incurred in the production of the rental income. Any other amounts (in addition to the monthly rental) paid to property owners for the rental of residential accommodation are also subject to income tax.^[4]

Permissible expenses include:^[4][5]

• Rates
• Mortgage interest
• Realtor fees
• Homeowner's insurance
• Garden services
• Security services
• Repairs done to the rented area
• Levies
• Municipal service fees for water and electricity
• Accounting fees

The supply of a dwelling is an exempt supply for VAT purposes. As such, owners cannot deduct VAT incurred on these expenses.^[5]

The sale of immovable property in South Africa attracts what is known as transfer duty. These duties are payable directly to SARS, and a sale cannot be concluded until the duties have been paid. Transfer duty is applicable to various kinds of property, including:^[6] Any relevant changes in transfer duties are announced in National Budget Speeches, which occur annually.^[6]

• Land and fixtures
• Real rights in land
• Rights to minerals
• Shares in residential property companies
• Any other immovable property

As of February 2026 (and in effect from April 2025), all properties with a value under R1.21 million are exempt from transfer duties.^[7]

Transfer duty is charged according to a progressive scale, set by SARS. In other words, duty percentages are for portions of the property value above a certain amount, not on the entire value of the property. Duties range from 3% to 13%.^[7]

Certain property sales are exempt from transfer duties. These are sales related to:^[6]

• Marriage in community of property
• Divorce settlements
• Inheritance
• Cancelled transactions

Transfer duty is distinct from transfer costs. The latter refers to fees paid to the conveyancing attorney appointed to manage the property transfer.^[6]

By law, a property sale in South Africa cannot be subject to both VAT and transfer duty. VAT always takes precedence when the seller is a registered VAT vendor.^[6]

Capital gains tax, introduced in South Africa in 2001,^[8] refers to taxes charged on the gains made (i.e., the increase in value) on a property. It is calculated according to any increase from the base cost to the sale price. The base cost is the purchase price plus plus any amounts spent on renovations or improvements, as well as a few other smaller costs.^[8]

The capital gains tax rate is set by SARS. Only 40% of the total capital gain (profit) is taxable income.^[8]

Capital gains tax applies to transactions including property sales, donations, and exchanges.^[9]

As of February 2026, the capital gains tax rate is 18% for individuals and special trusts, 21.6% for companies, and 36% for other trusts.^[9]

Exemptions from capital gains tax include:^[9]

• A R2 million gain or loss on the disposal of a primary residence
• Most personal use assets (such as a motor vehicle)^[8]
• Retirement benefits
• Payments in respect of original long-term insurance policies
• Specific small business exclusions
• A R40,000 annual capital gain or capital loss for individuals and special trusts

Property owners are obligated to declare capital gains when they file their income taxes.^[8] Foreigners who own property in South Africa are subject to withholding tax, which is charged at a rate of between 7.5% and 15%, depending on the category of seller. Withholding tax is not a final tax - foreign owners of South African property still need to establish their tax liability for the year relating to the sale, in order to determine whether they underpaid or overpaid tax on the sale of the property.^[10]

• Housing in South Africa
• Taxation in South Africa