By: Umar Khan (Candidate Attorney), Ziyaad E Patel Attorneys

Introduction

Following the Minister of Finance’s budget speech, a revised transfer duty framework came into effect on 1 April 2025. In terms of this update, no transfer duty is payable on immovable property transactions where the value of the property is below R1.2 million. This threshold, which is subject to annual review by the South African Revenue Service (SARS), plays a significant role in determining whether transfer duty is payable and at what rate.

For properties exceeding the threshold, transfer duty is calculated on a sliding scale based on the value of the property. The rates begin at 3% for properties valued between R1.2 million and R1.6 million, increasing progressively to a maximum rate of 13% for properties valued above R13.3 million.

While transfer duty is generally a mandatory component of property transactions, the Transfer Duty Act 40 of 1949 (“TDA”) provides for several statutory exemptions. This article focuses on the most relevant exemptions that apply to natural persons.

 

What Is Transfer Duty?

Transfer duty is a form of tax levied on the acquisition of immovable property in South Africa. In terms of Section 2 of the TDA, the purchaser is liable for payment of this tax to SARS. Importantly, transfer duty must be paid before the transfer of ownership can be lodged and registered in the deeds office.

The amount payable is calculated according to the value of the property, determined as the higher of the purchase price or the market value, and is assessed in accordance with the SARS transfer duty rates applicable at the time of transfer.

 

Transfer Duty vs Transfer Costs

It is essential to distinguish between transfer duty and transfer costs, as the two are often confused. While both are typically paid by the purchaser, they serve different purposes.

Transfer costs relate to the legal and administrative expenses involved in transferring ownership of the property. These costs are paid to the transferring attorney (conveyancer) and may include:

  • Conveyancing fees (based on Legal Practice Council guidelines),
  • Deeds office fees, and
  • Bank-related charges where a mortgage bond is registered.

Transfer costs are usually payable at the outset of the transfer process, once the Offer to Purchase (OTP) has been signed and the conveyancer appointed. Transfer duty, by contrast, is paid shortly before lodgement at the deeds office. Notably, an exemption from transfer duty does not exempt a purchaser from paying transfer costs.

 

Timing and Payment of Transfer Duty

The date of acquisition for transfer duty purposes is generally the date on which the OTP is signed by both parties. SARS requires payment of transfer duty within six months from this date, failing which penalties and interest may be imposed.

In practice, the conveyancer attends to the payment of transfer duty on behalf of the purchaser and must obtain a transfer duty receipt (or exemption receipt) from SARS. Without this receipt, the deeds office will not process the registration of the property into the purchaser’s name.

 

Statutory Exemptions From Transfer Duty

Although transfer duty is compulsory in most transactions, Section 9 of the TDA provides for specific exemptions. While no formal exemption application is required in most cases, the conveyancer must still submit the relevant declarations and supporting documents to SARS to obtain an exemption receipt.

The most common exemptions applicable to natural persons are discussed below.

 

Property Transactions Below the Threshold (Section 2)

Where the value of the property is below R1.2 million, no transfer duty is payable. This exemption applies to both natural and juristic persons and is assessed based on the higher of the purchase price or the market value of the property.

Although SARS may revise the monetary threshold annually, the exemption itself is entrenched in statute and cannot be arbitrarily disregarded.

 

Transfer of Partnership Property to Individual Partners (Section 9(3))

No transfer duty is payable when immovable property is transferred from a partnership to its partners upon the dissolution or termination of the partnership.

A partnership does not have separate legal personality, and partners are personally liable for its obligations. This exemption applies only to each partner’s proportional interest in the partnership property. Where a partner receives an excess portion, transfer duty will be payable on that excess.

 

Property Acquired Through Inheritance (Section 9(1)(e))

Transfer duty is not payable where immovable property is acquired by an heir or legatee from a deceased estate, whether in terms of a will or intestate succession.

This exemption applies only to the direct transfer from the deceased estate to the beneficiary. If the beneficiary later sells the property, transfer duty will apply to that subsequent transaction. Additionally, if a beneficiary purchases estate property that was not specifically bequeathed to them, the transaction is treated as a sale and does not qualify for exemption. This exemption applies only to natural persons.

 

Property Transfers Following Divorce (Section 9(1)(i))

Where immovable property is transferred between former spouses pursuant to a divorce order, transfer duty is exempt. This applies whether the property is awarded by court order or in terms of a settlement agreement incorporated into the divorce decree.

To rely on this exemption, SARS requires a copy of the divorce order, and the transfer must occur strictly between the former spouses.

 

Transfers Between Spouses During Marriage (Section 9(1)(k))

In marriages in community of property, each spouse automatically acquires an undivided half share in the other spouse’s assets upon marriage. Any corresponding changes recorded in the deeds registry as a result of this legal consequence are exempt from transfer duty.

 

Transactions Subject to VAT (Section 9(15))

Where a property transaction is subject to Value-Added Tax (VAT), transfer duty is not payable. This exemption exists to prevent double taxation.

If the seller is a VAT vendor and the sale attracts VAT—either at the standard rate of 15% or at a zero rate where the property is sold as a going concern—transfer duty will not apply, regardless of the value of the property.

 

Claiming a Transfer Duty Exemption

It is crucial that the applicable exemption is correctly identified. The conveyancer must submit a transfer duty declaration via SARS eFiling, together with all required supporting documentation, such as proof of inheritance or a divorce order.

Once SARS has assessed the submission, it will issue a transfer duty exemption receipt, which must be lodged at the deeds office to allow registration of the transfer.

 

Conclusion

Understanding the distinction between transfer duty and transfer costs is fundamental when acquiring immovable property in South Africa. While transfer duty can represent a significant financial burden, the exemptions provided for in the Transfer Duty Act offer meaningful relief in qualifying circumstances.

Prospective purchasers are encouraged to familiarise themselves with the available exemptions and to ensure that all procedural requirements are properly met. Doing so can prevent unnecessary delays, penalties, and costs, while facilitating a smoother property transfer process.