Capital Gains Tax South Africa
My Cape Town South Africa



Cape Town South Africa Cape Town Flowers Bo Kaap Cape Town Bo Kaap Cape Town Table Mountain Cape Town

Capital Gains Tax South Africa

CGT or Capital Gains Tax in South Africa is payable on the sale of real estate. The CGT liability differs depending on whether the seller is:

  • a resident selling their primary residence,
  • a resident selling a property that is not their primary residence,
  • a non-resident,
  • a non natural person such as a company, close corporation or trust.

South Africa Resident Seller of Real Estate – Primary Residence/Dwelling


A resident selling their home qualifies for exemption from CGT or capital gains on the first R 1,500,000 profit made on the property if that property is their primary dwelling.


CGT in South Africa is then calculated on a quarter of the taxable gain (total gain less R1,500,000) at the seller’s marginal annual income tax rate.


Example:


Selling Price = SP

Taxable Profit = TP

Base Cost = BC

TP = ((SP – BC) – 1,500,000) * 25%


Thus since the top income tax bracket in South Africa is 40%, the maximum CGT for an individual on their primary residence will be:


CGT max = 40% * 25% * TP = effective 10% of TP.


Non-Resident Seller of Real Estate
OR
Resident Seller of non-Primary Dwelling


When the non-resident owner of a property decides to sell, then they have to pay capital gains tax on the full value of the capital gain. They won’t qualify for any rebate. This is also true for a resident selling their non-primary residence.


CGT is then calculated on a quarter of the gains at the seller’s marginal annual income tax rate.

Example:


Selling Price = SP

Taxable Profit = TP

Base Cost = BC

TP = (SP – BC)* 25%


Thus since the top tax bracket in South Africa is 40%, the maximum CGT for an individual on their primary residence will be:


CGT max = 40% * 25% * TP = effective 10% of TP.


Trusts selling Property


The Rm1,5 exemption does not apply.

CGT is calculated on 50% of the profit.

Example:


Selling Price = SP

Taxable Profit = TP

Base Cost = BC

TP = (SP – BC)* 50%


Thus since the tax on a trust is 40%, the maximum CGT for trust will be:


CGT max = 50% * 40% * TP = effective 20% of TP.


Close Corporations or Companies Selling Property


The Rm1,5 exemption does not apply.

CGT is calculated on 50% of the profit.


Example:


Selling Price = SP

Taxable Profit = TP

Base Cost = BC

TP = (SP – BC)* 50%


Thus since the tax on a trust is 28%, the maximum CGT for trust will be:


CGT max = 50% * 28% * TP = effective 14% of TP.


Resident Status:

In order to qualify as a resident in South Africa, you have to live in the country for more than 181 days in any year.



Back from Capital Gains Tax South Africa to HOME
Copyright 2010 My Cape Town South Africa