No transfer duties for properties less than R1-million

No transfer duties for properties less than R1-million

Those planning to buy property can breathe a sigh of relief. There will be no transfer duties for properties that cost less than R1-million.

House for sale
House for sale/ iStock

Finance Minister Tito Mboweni made the budget speech on Wednesday, 26 February.

In his speech, he said that there will be no transfer duties on properties of R1-million or less. 

"Transfer Duty is the Government Tax levied to transfer the property from the seller's name into the buyer's name and should not be confused with Transferring Conveyancers Fees, as this cost is for the service that the transferring attorney provides to get the property transferred from the existing owner to the buyer and to register the property into the buyer’s name," says estate agent Jane Willard, who works for Remax. 

"In the previous tax year, there was no transfer duty payable on property purchased below R900,000. The 2020 budget changed this in that there is no transfer duty payable on property purchased below R1,000,000," she adds. 

This is good news for those wanting to buy property, especially first-time home buyers. 

Buying property can be costly. 

The purchaser is liable for the payment of the purchase price - this can either be paid in cash or by way of a deposit with a loan from a bank.

The purchaser must also pay for the transfer duties to the conveyancing attorneys attending to the transfer and the costs for obtaining a rates clearance certificate, as well as a levy clearance certificate in the case of a sectional title scheme or a gated estate.

That is not all. The purchaser must also pay for the conveyancing fees, deeds office fees, and registration fees as per the recommended fee guideline and miscellaneous disbursements.

So the no transfer duties for properties less than R1-million comes as a sigh of relief. 

"This translates into an immediate saving for the home buyer. The buyer has to have the funds for the transfer duty and conveyancing costs as they are not included in the purchase price. So any saving in this arena is a relief in an already costly process of property purchasing. This, in turn, will have a positive impact for the buyer and the property industry at large," says Willard. 

Jabulile Lefu, an estate agent who works for JL Properties, says the transfer duties alone would work out to thousands of Rands. 

"The transfer duty exemption for properties of R1,000,000 and below means more buyers can purchase properties without worrying about paying large amounts of tax," she said.  

Lefu added: "We've seen in the past that attorney fees can be a stumbling block for most first time homeowners, who would qualify for bonds but fail to raise the money quoted to ensure registration of the property."

With no transfer duties for properties that cost less than R1-million, Lefu believes "sellers will sell their properties smoothly without delays".

READ: #BudgetSpeech2020: How does it affect the everyday consumer?

Image courtesy of iStock/ Feverpitched

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