If you are embarking on a house sale, it is important that you know how transfer duties work and how you are affected by it. Transfer duty can be defined as a tax that has to be paid to the government on the value of a property that is bought by a person. The person who carries out the transfer is called a Conveyancer, and all conveyancers have to be registered with the South African Revenue Services.
Transfer duty is only paid on properties with a purchase price of more than R750,000, and the percentages liable to be paid is calculated according to a sliding scale which increases the amount of duty payable as the purchase value increases. The scale is as follows:
- R0 – R750,000: 0%
- R750,001 – R1250,000: 3% on the value above R750,000
- R1250,001 – R1750,000: R15,000 plus 6% of the value above R1250,000
- R1750,001 – R2250,000: R45,000 plus 8% of the amount above R1750,000
- R2250,001 and above: R85,000 plus 11% of the amount above R2250,000
The purchaser of the property is liable for the full payment of transfer duty, and as a result it is important that the buyer knows how much is to be paid in addition to the purchase price of the property. Transfer duty has to be paid within 6 months of the date of sale, and defaults on the payment of duties incur additional interest charges, and interest will be charged at a prescribed rate.
Transfer fees
A conveyancer is an attorney that is responsible for ensuring that the property is transferred from the seller to the purchaser.
Transfer fees differs from transfer duty in that it is a fee payable for a service that is rendered by a professional, which means that the money is payable to the transferring attorney for the service of completing the legal documents that will transfer the property from one person to another. While the conveyancer is appointed by the seller, the cost of the transfer fee has to be paid by the buyer. As with transfer duties these fees are also calculated on a predetermined scale based on the value of the property. Transfer fees have to be paid before or at the same time that the property is registered and filed with the deeds office and the property effectively transferred into the name of the purchaser.
It is essential that you are sure what these charges mean and that you are prepared to pay these where needed. If you are a seller, you have to know how much transfer fees will set you back, and if you are the purchaser, ensure that you know how much transfer duty you will have to pay before embarking on a purchase!