Properties under R1 million have no transfer fees
“Transfer duty is the government tax levied to transfer the property from one 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 into the buyer’s name.“
On 26 February this year, the National Treasury announced that from 1 March 2020 consumers buying properties valued at less than R1 million will no longer be required to pay transfer duties.
This comes after the National Treasury announced in 2017 that home buyers and property investors looking to buy property below the market value of R750 000 no longer needed to pay transfer duties.
Let’s talk numbers
Consumers buying properties valued between R1 000 001 and R1 375 000 will be liable for transfer duty costs of 3% of the property value. Those purchasing between R1 375 001 and R1 925 000 will be charged R11 250 plus 6% of the total value of the property in transfer costs.
The National Treasury said that R44 250 plus 6% will be charged on property valued above R1 925 000, while those buying property north of R2 475 00 will part with R88 250 and an additional 11% in transfer duties.
Wealthy spenders acquiring property valued above R11 million – such as those in upmarket areas like Bishopscourt in Cape Town and Hyde Park in Johannesburg – will part ways with transfer duties of just over R1 million plus 13% of the value of the property.
“The increase in the transfer duty threshold provides a very positive incentive – not only for first-time homebuyers, but also for others seeking affordably priced homes – a sector which represents a key driver in the current market.” – Pam Golding
How does this benefit YOU as a property investor?
For starters, you’re saving money! Transfer duties generally constitute the major portion of the costs involved. A successful property entrepreneur knows the importance of saving on costs, and how this can benefit you in the long run.
Another benefit of no transfer fees under R1 million is that you don’t waste unnecessary time going through the processes of getting approval and making payments. Naturally, this means that you as a property investor can focus on something more time-efficient.
Now you’re probably thinking, “Why does it sound like you’re bribing me to invest now?”
Well, with everything that’s happening in the market at the moment, now is the perfect time for investments. Based on what’s known, buying stocks right now is a good idea for investors with a long-term perspective. Knowing that the global economy will rebound should allow you to invest in property and feel confident in the knowledge that you’ll make solid returns over the next decade.