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Everything you need to know before buying real estate is included in our South Africa Property Pack
Understanding property taxes and fees in South Africa is crucial before making any real estate purchase.
The country operates on either a transfer duty system or VAT system depending on the seller, with transfer duty being the most common for individual property purchases. Beyond the initial purchase taxes, buyers face various attorney fees, municipal costs, ongoing charges, and potential future selling expenses that can significantly impact the total cost of property ownership.
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South African property buyers typically pay transfer duty instead of VAT, with no duty required for properties under R1,210,000 as of 2025.
Total transaction costs including attorney fees, municipal charges, and ongoing expenses typically add 8-12% to the property purchase price.
| Cost Category | Typical Range | Payment Timing |
|---|---|---|
| Transfer Duty | 0-13% (based on sliding scale) | During transfer process |
| Attorney Fees (Transfer) | R7,500-R45,000 + VAT | During transfer process |
| Bond Registration Fees | R6,500-R42,000 + VAT | During transfer process |
| Municipal Clearance | R10,000-R30,000 | Before transfer |
| Monthly Municipal Rates | R1,000-R5,000 | Monthly ongoing |
| Building Insurance | R150-R400/month | Monthly ongoing |
| Future Selling Costs | 7-9% of sale price | When selling |
Do I pay VAT or transfer duty when buying property in South Africa?
Most residential property purchases in South Africa are subject to transfer duty, not VAT.
Transfer duty applies when you buy from an individual seller or non-VAT registered entity. VAT at 15% only applies when purchasing from a VAT-registered developer or seller conducting business activities. The sales agreement must clearly state whether the price is VAT-inclusive or subject to transfer duty.
As of September 2025, transfer duty operates on a sliding scale with the first R1,210,000 exempt from any duty. For properties above this threshold, rates range from 3% to 13% depending on the purchase price. Properties between R1,210,001 and R1,663,800 attract 3% duty on the amount above R1,210,000.
For higher-value properties, the duty increases significantly. Properties worth R2,994,801 to R13,310,000 pay R106,784 plus 11% on the amount above R2,994,800. The highest bracket applies to properties over R13,310,000, which pay R1,241,456 plus 13% on the excess amount.
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What are the bond registration attorney fees and Deeds Office charges?
Bond registration attorney fees follow a prescribed sliding scale based on the loan amount.
For bonds up to R500,000, expect to pay between R6,500 and R13,000 excluding VAT. Bonds between R500,001 and R1,000,000 typically cost R13,000 to R16,000 in attorney fees. Larger bonds from R1,000,001 to R2,000,000 range from R16,000 to R23,000, while bonds between R2,000,001 and R5,000,000 can cost R23,000 to R42,000 excluding VAT.
The Deeds Office charges a separate bond registration fee based on the bond size, typically ranging from R1,000 to R5,000. This fee is payable directly to the Deeds Office and covers the administrative costs of registering the mortgage bond.
All attorney fees are subject to 15% VAT, which significantly increases the total cost. For a R1,500,000 bond, you might pay approximately R20,000 in attorney fees plus VAT, bringing the total to around R23,000, plus the Deeds Office registration fee.
What are the total transfer attorney fees and related costs?
| Purchase Price Range | Base Attorney Fee (Excl. VAT) | Total with VAT & Disbursements |
|---|---|---|
| R0 - R500,000 | R7,500 - R14,000 | R12,000 - R20,000 |
| R500,001 - R1,000,000 | R14,000 - R17,000 | R20,000 - R25,000 |
| R1,000,001 - R2,000,000 | R17,000 - R25,000 | R25,000 - R35,000 |
| R2,000,001 - R5,000,000 | R25,000 - R45,000 | R35,000 - R60,000 |
| Above R5,000,000 | Negotiable above R45,000 | R55,000+ |
What bank costs should I expect during the property purchase?
South African banks charge several fees when financing your property purchase.
The bond initiation fee is capped at R6,037.50 including VAT and covers the bank's administrative costs for processing your home loan application. This is a once-off fee paid during the loan approval process.
Property valuation fees typically range from R2,000 to R5,000 including VAT, depending on the property value and location. Some banks include this cost within their overall loan charges, while others charge it separately. The valuation is mandatory as it protects both you and the bank by confirming the property's market value.
Monthly service and administration fees range from R69 to R80 including VAT. This recurring charge covers account maintenance, statement generation, and ongoing loan administration throughout the bond period.
Additional costs may include credit life insurance premiums if required by the bank, typically ranging from R200 to R1,000 monthly depending on your age, health status, and loan amount.
What municipal costs are due before property transfer?
Municipal clearance is mandatory before any property transfer can be completed in South Africa.
All outstanding municipal rates and service charges must be paid in full before transfer. The municipality typically requires an advance payment covering 2 to 6 months of future rates and services, which can range from R10,000 to R30,000 depending on the property value and municipal tariffs.
The municipal clearance certificate fee varies by municipality but typically ranges from R300 to R600. This certificate confirms that all municipal accounts are up to date and authorizes the transfer process.
Some municipalities also require deposits for new accounts, particularly for utilities like electricity and water. These deposits are usually equivalent to two to three months' average consumption and are refundable when the account is closed in good standing.
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How are pro-rata adjustments calculated on transfer day?
Pro-rata adjustments ensure fair cost-sharing between buyer and seller based on actual ownership periods.
Municipal rates, utility bills, and levy payments are divided proportionally based on how many days each party owns the property during the transfer month. If transfer occurs on the 15th of the month, the seller pays for the first 15 days while the buyer covers the remaining days.
Common adjustments include municipal rates (typically R100-R200 per day), electricity consumption (if postpaid), water charges, refuse collection fees, and sectional title levies. The exact amounts depend on current municipal tariffs and actual usage patterns.
Prepaid utilities like electricity meters require special attention. The seller receives credit for unused electricity units remaining in the meter at transfer, typically calculated at the current tariff rate. Water and gas prepaid meters follow the same principle.
The conveyancing attorney prepares a detailed adjustment statement showing all calculations, with the net amount either paid by the buyer to the seller or vice versa depending on the balance of prepaid versus outstanding amounts.
What are sectional title and estate-related costs?
Sectional title properties and estates have additional costs beyond standard municipal charges.
Monthly levies for sectional title units typically range from R1,500 to R5,000 depending on the complex size, amenities, and management quality. These levies cover building maintenance, insurance, security, garden services, and common area upkeep. Luxury complexes with extensive facilities can charge significantly higher levies.
Special levies may be outstanding for major repairs or improvements like roof replacement, elevator upgrades, or security system enhancements. These amounts vary widely but can range from R10,000 to R50,000 per unit for substantial projects.
The body corporate or homeowners association (HOA) charges a clearance fee ranging from R500 to R2,500 to provide transfer documentation. This certificate confirms all levies are paid and no outstanding amounts exist against the unit.
Estate properties may have additional charges like entrance fees, golf club memberships, or recreational facility access that can add R500 to R3,000 monthly to your ownership costs.
What are the ongoing monthly municipal charges?
1. **Property Rates**: Calculated as a percentage of municipal value, typically 0.4% to 1% annually, resulting in R1,000 to R5,000 monthly for most urban properties2. **Refuse Collection**: Standard service ranging from R150 to R450 monthly depending on bin size and collection frequency3. **Sewerage Charges**: Based on water consumption and property type, typically R180 to R600 monthly4. **Water Basic Charge**: Fixed monthly charge of R30 to R60 plus consumption charges averaging R300 to R800 monthly5. **Electricity**: Consumption-based charges typically ranging from R500 to R2,000 monthly for average householdsWhat utility deposits and setup fees are required?
New property owners must pay various deposits and connection fees to establish utility accounts.
Electricity and water deposits typically range from R1,500 to R3,000 per utility and are fully refundable when accounts are closed in good standing. These deposits protect municipalities against non-payment and are usually equivalent to two to three months' average consumption.
Gas connection fees for properties with gas supply range from R500 to R1,500 as a once-off charge. Fibre internet installation can cost R500 to R2,500 depending on the provider and existing infrastructure.
Some municipalities charge account setup fees of R200 to R500 for opening new utility accounts. Credit checks may be required, and higher deposits might be demanded for customers with poor credit histories.
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What insurance costs are mandatory for property owners?
Banks require comprehensive building insurance for all bonded properties in South Africa.
Homeowners building insurance typically costs R150 to R400 monthly depending on the property value, location, and coverage level. This insurance must cover the full replacement value of the building structure and is mandatory throughout the bond period.
Life credit protection insurance may be required by the bank to cover the outstanding loan balance if the borrower dies or becomes permanently disabled. Monthly premiums range from R200 to R1,000 depending on age, health status, loan amount, and coverage period.
Additional optional insurance includes household contents cover (R100-R300 monthly), personal liability insurance, and specific coverage for high-value items like jewelry or art. Motor vehicle insurance is separate but essential for property owners with garages or parking areas.
Insurance premiums are generally tax-deductible for investment properties but not for primary residences. Annual reviews help ensure adequate coverage as property values change over time.
What will it cost to sell my property in the future?
| Selling Cost Category | Typical Rate/Amount | Example on R2M Sale |
|---|---|---|
| Estate Agent Commission | 5-7% + 15% VAT | R115,000 - R161,000 |
| Conveyancing Fees | R4,000 - R6,000 | R5,000 |
| Bond Cancellation Fees | R4,000 - R6,000 | R5,000 |
| Electrical Certificate | R500 - R1,500 | R1,000 |
| Plumbing Certificate | R500 - R1,500 | R1,000 |
| Gas Certificate (if applicable) | R500 - R1,500 | R1,000 |
| Beetle Certificate | R500 - R1,500 | R1,000 |
| Total Selling Costs | 7-9% of sale price | R129,000 - R175,000 |
How is capital gains tax calculated when selling property?
Capital gains tax in South Africa applies to the profit made from selling property above certain exclusions.
Primary residence owners receive a R2 million capital gains exclusion, meaning the first R2 million of profit is completely tax-free. This exclusion significantly reduces or eliminates capital gains tax for most homeowners selling their primary residence.
For gains above the exclusion threshold, individuals include 40% of the capital gain in their taxable income, which is then taxed at their marginal tax rate ranging from 18% to 45%. For example, a R800,000 gain after exclusions results in R320,000 additional taxable income, potentially generating R83,200 to R144,000 in tax liability.
Investment properties don't qualify for the primary residence exclusion, making capital gains tax more significant for property investors. Companies and trusts face different inclusion rates and tax calculations, with companies including 80% of capital gains in taxable income.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Understanding all property taxes and fees is essential before committing to any South African real estate purchase.
The total cost of property ownership extends far beyond the purchase price, with ongoing municipal charges, insurance requirements, and potential selling costs significantly impacting your investment returns.
Sources
- Schoeman Law - Tax on Property Sales in South Africa
- VDM Attorneys - VAT or Transfer Duty
- SARS - New Transfer Duty Rates 2025
- Private Property - What is Transfer Duty
- NMA Law - 2025 Budget Impact on Property Transfer Costs
- LSSA - Conveyancing Fee Guidelines 2024
- Burger Huyser Attorneys - Property Transfer Costs
- GSR Law - Property Transfer and Bond Registration Cost Guide