SARS penalties for delayed Transfer Duty payments
Buying a property is a massive investment into your future and can, for some, be a form of financial security. Purchasers should be aware of all the fees and costs that go into buying a property, though, as it is not just the purchase price that needs to be paid. Transfer Duty is an additional cost that has to be paid by a certain time. If it is not paid on or before the appropriate date, you could be facing some hefty penalties.
What are transfer duties
Whenever you buy a property, it has to be transferred to your name. The Transfer Duty is a tax levied on the value of the property when it is acquired (bought) by someone. The current rate at which the tax is levied is valid until 28 February 2023 and is detailed in the table below:
| Value of the property (R) | Rate |
| 1 – 1 000 000 | 0% |
| 1 000 001 – 1 375 000 | 3% of the value above R1 000 000 |
| 1 375 001 – 1 925 000 | R11 250 + 6% of the value above R1 375 000 |
| 1 925 001 – 2 475 000 | R44 250 + 8% of the value above R1 925 000 |
| 2 475 001 – 11 000 000 | R88 250 + 11% of the value above R2 475 000 |
| 11 000 001 and above | R1 026 000 + 13% of the value exceeding R11 000 000 |
This amount is payable within 6 months from the date of acquisition. The conveyancer responsible for transferring the property to the new owner is usually responsible for ensuring that this tax is paid in time and all conveyancers are required to be registered with SARS.
Transfer Duty should not be confused with the Transfer of Property costs which is the fee owed to the conveyancing attorney responsible for the transfer of ownership.
When is Transfer Duty applicable to be paid?
As per SARS and for the purpose of Transfer Duty the “property” on which Transfer Duty is levied includes”
- Land and fixtures;
- Real rights in land, excluding right under mortgage bonds or leases;
- Rights to minerals or rights to mine including leases or sub-leases to mine for minerals;
- A share or interest in a “residential property company”;
- A contingent right to residential property or a share or member’s interest in a “residential property company” held by a discretionary trust (not a special trust), where the acquisition of the right is consequence of an agreement for consideration in relation to property held by that trust; or accompanied by a change in the debt or security structure of the trust; or accompanied by a change in the trust’s trustee; and
- A share in a share block company.
When a property sale has conditions that need to be met, it is important to remember that the 6 months in which the amount should be paid is calculated from the date the agreement was signed and not the date that the conditions are fulfilled.
It is also important to note that a property sale is not subject to both VAT and Transfer Duty. If the seller is a registered VAT vendor and the property forms part of the seller’s enterprise, VAT will take preference and will need to be paid rather than a Transfer Duty. If the property is not part of the seller’s enterprise, Transfer Duty will have to be paid.
So, what if the Transfer Duty is paid later than 6 months?
SARS is clear that any late payment of a Transfer Duty will be subject to interest that is calculated at 10% per annum for each completed month. A complete month is calculated as the first day from the expiry of the interest-free 6 months to the date of payment.
Can I be exempt from having to pay Transfer Duty?
Yes, you can. Transfer Duty is not levied against properties that are being transferred (or not transferred as the case may be) for the following reasons:
- Marriage in community of property;
- Divorce;
- Inheritance;
- Cancelled transactions.
When you need conveyancing attorneys that will see to the timely and efficient transfer of your property, let us know.
AED Attorneys understands that every situation is unique, and although they strive to ensure that the information contained herein is accurate at the time of publishing, it cannot be guaranteed to be without errors or omissions. As a result, AED Attorneys, its employees, independent contractors, associates or third parties will under no circumstances accept liability or be held liable for any innocent or negligent actions or omissions in this article, which may result in any harm or liability flowing from the use of or the inability to use the information provided.