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How Much Is the Transfer Cost on a House?

How Much Is the Transfer Cost on a House?

The transfer cost varies, depending on the purchase price and the conveyancer's fees plus VAT, as well as the bond costs and transfer duty payable to SARS. Find out the estimated costs of buying a property, when to pay, who to pay, and what the money is used for.


What Is Transfer Duty?

When buying a home, it’s important to remember that the price tag on the property is not all you’re going to have to budget for. It’s best to have between 8 and 10% of the purchase price put aside for other purchase expenses, including bond costs and transfer duties. Transfer Duty is a government tax levied to transfer the property from the seller's name into the buyer's name.


According to SARS, the transfer duty is the tax levied on the value of any property acquired by any person by way of a transaction - or any other means. Transfer duty applying to property refers to land and fixtures, including real rights in land, rights to minerals, a share or interest in a residential property company, or a share in a share block company. 


Who Pays the Transfer Cost and When?

The burden of property transfer costs falls on the shoulders of the buyer and is payable within six months from the date of acquisition. If the buyer fails to pay the transfer costs within this timeframe, interest will be added at a rate of 10% per year for each completed month – which is calculated as the first day from the expiry of the interest-free, six-month period to the date of payment. 


It’s important to note that, in the case of conditional sales on a home, the six-month period starts on the date that the transaction was entered into, not the date when the contract becomes binding. This means the period starts on the last date of the party signature to the agreement, not the date the conditions are fulfilled. 


Who Do You Pay the Transfer Duty To?

The transfer costs are paid to the estate agent or conveyancing attorney who is responsible for the transfer of the property into your ownership. In South Africa, it is actually the seller who gets to appoint the conveyancing attorney, while the cost is still covered by the purchaser. This makes negotiating fees with the conveyancing attorneys trickier, however, there is nothing stopping the buyer from putting forward suggestions of conveyancing attorneys. Just take note that the conveyancing attorney’s fees are separate from the transfer duty costs. 


How Do You Calculate the Transfer Cost?

SARS is responsible for determining the transfer duty amount, and this is calculated according to the value of the property – not the selling price. However, in most cases, the selling price of the property will represent the property value, so it’s easier to work out an estimate. Red flags for SARS will be when a property is being sold within a family, where the selling price could possibly undercut the actual value. Use our transfer cost calculator to get a useful estimate. 


What Are the Transfer Duty Rates?

Before March 2020, the transfer duty threshold was limited to properties of R900 000. However, the transfer duty threshold has since been lifted to R1m, which means that properties valued below R1m are not subject to any transfer costs


The Transfer Duty Rates for 1 March 2020 to 28 February 2021

These costs apply to properties that were purchased after 1 March 2020 over R1m in value. 

  • From R 1 000 001 to R 1 357 000, the transfer duty is calculated at 3% of the value above R 1 000 000. 

  • From R 1 375 001 to R 1 925 000, the transfer duty is calculated at 6% on the value above R 1 375 000 PLUS a flat rate of R 11 250.

  • From R 1 925 001 to R 2 475 000, the transfer duty is calculated at 8% on the value above R 1 925 000, PLUS a flat rate of R 44 250.

  • From R 2 475 001 to R 11 000 000, the transfer duty is calculated at 11% of the value above R 2 475 000 PLUS R 88 250.

  • From R 11 000 001 and above, the transfer duty is calculated at 13% of the value exceeding R 11 000 000 PLUS R1 026 000.

What Are Some of the Exemptions to Transfer Duty?

There are certain instances where transfer duty is not required on a property transfer. Here is a look at some of the exemptions.


  • When a Property Is Subject To VAT

No transaction, under South African law, can be subject to both VAT and transfer duty. When it comes to property transfers, VAT will take precedence over transfer duty. You will usually encounter VAT payments in new developments, whereby no transfer duty costs are charged and the VAT is factored into the property price. However, make sure this is clarified before any agreement is entered into. 


  • In the Instance of Divorce

In the case of a marital or civil union divorce, where a property is awarded to a spouse in terms of a divorce order, then no transfer duty is required. However, where a property is awarded to a spouse in an agreement outside of divorce proceedings, transfer costs still apply. 


  • Marriage in Community of Property

When two people enter into marriage in community of property and a house is purchased, the spouse is awarded half the share of the property without requiring to pay transfer duty


  • Cancelled Transactions

When a property purchase is cancelled before the registration of the transfer at the Deeds Office, SARS can deem the cancellation legitimate and will not charge transfer duties. 


  • Property Inheritance 

In the case of a death, the beneficiaries of the deceased are not required to pay transfer duties on properties. This applies no matter what the relationship to the deceased, or whether a valid will is in place. 


What Extra Costs Are There When Buying a House?

Outside the transfer duties and conveyancing attorney’s fees, buyers should also factor in a number of other costs related to home ownership (which can be worked out through an extra cost calculator). These could include:


  • A Deposit

If you’ve chatted to homeowners who’ve bought recently, you will notice a trend that has emerged -  it’s very difficult to qualify for a 100% home loan. If you’re considering buying a property, the current advice is to start saving for a deposit, which should be around 10 to 30% of your anticipated purchase price. Paying a deposit upfront is not only a better way to ensure you qualify for a home loan, it’s a good way to reduce your monthly instalments on the bond. Work out how much you save using a deposit savings calculator


When is the deposit paid?

The deposit will be made in advance to the transferring attorneys who will hold the funds in a trust account until registration of the bond. As soon as the registration is made, the deposit is paid to the bank, and the interest accrued on the deposit amount is transferred to you. 


  • Bond Registration 

When buying a house with a home loan, you’ll also need to factor in the fees related to bond registration which includes the registration cost of the property, the registering attorney’s fees, and the levy charged by the registering attorney (for postage and sundries).


If you take occupation before the property has been transferred into your name, you’re liable to pay occupational rent which is agreed up in the offer to purchase. Once the property has been transferred, however, you will then start your monthly bond repayments which are often tied to a 20-year home loan period. Use a bond calculator to work out these costs. 


What Are Some Other Costs of Home Ownership?

  • Building and household insurance – This provides insurance against any damage to your property or theft of household goods. 

  • Bond insurance – This is a form of life cover that provides for bond repayment in any event. 

  • Rates and taxes – This will depend on the property value and location and should be considered before any purchase is made.

It’s best to go into a property purchase fully aware of all the unexpected costs involved so that you don’t end up in a dire financial situation, unable to keep up with the

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