Updated 06.04.2023

What Are The Transfer Costs On a Property

Do you know what the transfer costs on a property are? Read on as we unpack this subject.

First-time homeowners consider a lot before putting in an offer on a new house. When everything is unclear, it is not always easy to take the plunge and commit to buying a house or home. This means determining transfer costs, attorney fees, and other charges. Find out more about transfer costs on the property to learn more.

Transfer Costs On a Property

Calculating Transfer Costs

It is possible to calculate the property transfer costs using a unique calculator as this helps determine the bond registration cost, an extra cost that comes with property transfer. You want to know if the property cost is part of the purchase price you have to pay. Some property loans offer an extra  5 percent on top of the loan to cater for all the additional fees that one has to pay upfront. Usually, these include bond registration and transfer costs. 

What Affects Transfer Costs on Houses? 

You need to understand that the transfer costs on property vary. Usually, the purchase price, the conveyance fee, the value-added tax, the cost of bonds, and the transfer duty payable to SARs all affect the property transfer cost. Therefore, you should always research the property’s price, when to pay for it, who to pay, and what the money is utilized for.

Defining Transfer Duty

Budgeting for a home is always a priority when scouting for one. However, many potential home buyers don’t know that there is more to buying a home than the cost of the actual house. The price tag is just the beginning. Experts would advise putting aside at least 8 to 10 percent above the property’s price tag. This extra amount will cater to the additional expenses of the purchase process.

Common additional costs include transfer duties and bond costs. The transfer duty refers to the government tax levied to help transfer the property from the seller to the new buyer/owner. This cost caters to the process of changing names.

 Based on SARs, the transfer duty refers to the tax levied on the property value being acquired by the new buyer through a transaction or any other agreed means. The transfer duty that applies to properties often covers fixtures and land, rights to minerals, rights to the whole land, shares in share block companies, and interests or shares in residential property companies.

Cost of Transfer  – Who Pays it and When is it Paid

Usually, the transfer costs are handled by the buyer/ potential new owner. They should ensure the fee is paid within the first six months after acquiring the new property. Failure to adhere to these timelines often leads to additional interest at a 10% rate annually for each extra month. Note that this will be calculated from the first day of the expiry of the interest-free duration (after the first six months elapses from when you acquired the property or after completing payment for the property).

For conditional sales on homes, the 6-month duration commences from the day the transaction agreement happened. Once the buyers enter the transaction, the dates begin counting, not when the contract is binding. This translates to six months from the last date when the parties appended their signatures.  Do not count from when the agreement is concluded, as this is how people pay for lateness fees.

Who Receives the Transfer Payment?

The transfer costs/ duties will be paid to the conveyance attorneys or the estate agents. These are the professionals responsible for ensuring the property is transferred to your

ownership. Fortunately, the seller can decide who your conveyance attorney will be in South Africa even when the buyer foots the cost.

While this arrangement favors the seller as the buyer may have a lot of difficulties negotiating prices, it is also possible to have a list of suggested attorneys for the seller to choose from. Either way, note that the attorney’s fees are separate from the transfer costs, and you have to factor this into your budget.

Process of Calculating Transfer Costs

SARs are the people behind the transfer duty determination. The calculation often follows the property value and not necessarily the selling price. However, in most cases, the property value and selling price match, making it easy to come up with reasonable estimates. The SARs may raise concern if the property is sold within families and the selling price undercuts the actual value by a significant margin. Find a reasonable transfer cost calculator to get a reasonable estimate.

The Transfer Duty Rates you ought to Know

Before March 2020, transfer duty thresholds were capped at R900,000. Over time though, this amount has shot to R 1 Million, translating to the fact that properties below R 1 Million are not subject to transfer costs and charges.

Transfer duty rates from March 2020 to 28th February 2021 cover the transfer cost rates applied during this period.  It worked on properties purchased during this period as long as they were 1 million Rands and above. They include:

  • R 1 000 001 – R 1 357 000, transfer duty is calculated at 3% of the value above R 1 000 000. 
  • R 1 375 001 – R 1 925 000, transfer duty is calculated at 6% on the value above R 1 375 000 PLUS a flat rate of R 11 250.
  • R 1 925 001 – R 2 475 000, transfer duty is calculated at 8% on the value above R 1 925 000, PLUS a flat rate of R 44 250.
  • R 2 475 001 – R 11 000 000, transfer duty is calculated at 11% of the value above R 2 475 000 PLUS R 88 250.
  • R 11 000 001 and above, transfer duty is calculated at 13% of the value exceeding R 11 000 000 PLUS R1 026 000.

Transfer Duty Exemptions

While it is true that transfer costs are generally paid during the purchase and sale of property, there are instances in which there are exemptions worth noting.  Some of these include:

When a property is subject to VAT

Following South African law, no transaction is subject to transfer duty and VAT. When dealing with the property transfer, note that the VAT takes precedence over the transfer duties. This means that the VAT will be factored into the purchase price even when the transfer costs are not paid. Just be sure that this is clear in the agreement before committing yourself.

When Divorce is Involved

Whenever there is a civil union or marital divorce, the property awarding follows the stipulation in the divorce outcome. No transfer cost is incurred in such cases as the court order is executed. However, if the divorce settlement happens out of court and the spouse is awarded the property, then transfer costs will apply.

Other instances of transfer duty exemption include canceled transactions and property inheritance. The bottom line is to ensure you learn more about property charges to be safe.


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Job is a seasoned writer with a good understanding of the emerging markets, Africa to be specific.