Transfer duty rates were last amended in March 2006. The new transfer duty rate structure announced in the Budget of 2011 comes to all as a huge surprise and saving.

This would definitely give the property market a boost!

The revised transfer duty rates will apply to properties acquired under transactions concluded on or after 23 February 2011.

The revised transfer duty rates are as follows:

• Value of property R0 - R600 000 Rate 0%
• Value of property R600 001 - R1 000 000 Rate 3% (up to a maximum of R12 000)
• Value of property R1 000 001 - R1 500 000 Rate R12 000 plus 5% of the value exceeding R1 000 000
• Value of property R1 500 001 and above Rate R37 000 plus 8% of the value exceeding R1 500 000

Therefore as from 23 February 2011:

• no transfer duty will be paid where the transaction is subject to Value Added Tax (VAT);
• no transfer duty will be paid on properties with a value below R600 000; 
• where the value is above R600 001, the rate of transfer duty will be 3% up to R1 million, previously 5%;
• where the value is more than R1 million the rate is R12 000 plus 5% on the value between R1 million and R1.5 million; and
• where the value is over R1,5 million the transfer duty will be calculated as R37 000 plus 8% above that figure.

This amendment is welcomed by all and is not only restricted to natural persons but also applies to Close Corporations, Companies and Trusts. Before this amendment, juristic persons (other than natural persons) were paying a flat rate of 8%.

Prior to the amendment, transfer duty payable by natural persons on property where the purchase price was R1 million amounted to R25 000 and with the introduction of the revised tariffs, will be reduced to R12 000, a substantial saving. For a juristic person the saving on a R1 million transaction is R68 000.

Please contact our Real Estate and Conveyancing team should you require further information.

Insaaf Davids
Contact Number +27 (0) 21 480 7955
Email i.davids@bowman.co.za