If you’re planning to sell a property in South Africa, it’s essential to understand how Capital Gains Tax (CGT) may affect the amount you ultimately receive from the sale.
Watch: Capital Gains Tax – What Sellers MUST Know:
Capital Gains Tax legislation, exclusions, and thresholds are regularly updated by SARS, and relying on outdated information can lead to costly surprises. To help property owners plan properly, this guide explains the latest Capital Gains Tax rules applicable to property sales, based on current SARS legislation.
What Is Capital Gains Tax?
Capital Gains Tax is the tax payable on the profit you make when you sell a property.
In simple terms, the capital gain is calculated as:
Selling price
minus the original purchase price
minus certain allowable capital expenses
The result is your capital gain, before any exclusions are applied.
Allowable Deductions That Reduce Capital Gains Tax
SARS allows certain costs to be deducted when calculating the capital gain on a property sale. These deductions can make a significant difference to your final tax exposure.
Allowable deductions include:
- Transfer fees and legal costs paid when you originally bought the property
- Estate agent’s commission paid when selling
- Costs of required compliance certificates (electrical, gas, plumbing, beetle, etc.)
- Capital improvements made to the property
What Counts as Capital Improvements?
Capital improvements are expenses that add value to the property, such as:
- Major renovations
- Extensions or additions
- Structural upgrades
What You Cannot Deduct
General maintenance and repairs are not deductible, including:
- Painting
- Repairing leaks
- Replacing worn or broken items
Primary Residence Exclusion – Updated Rules
If the property was owned by you in your personal capacity (as a natural person) and was your primary residence, you may qualify for the Primary Residence Exclusion, which is currently R3 million.
This exclusion applies if:
- The property was mainly used for residential purposes
- The total property size does not exceed 2 hectares
⚠️ Important:
- The Primary Residence Exclusion does not apply to properties owned by companies
- It generally does not apply to trusts
Annual Capital Gains Exclusion
In addition to the primary residence exclusion, natural persons also benefit from an annual capital gains exclusion of R50,000.
There is a separate, higher exclusion applicable to deceased estates in the year of death.
How Much of the Capital Gain Is Actually Taxed?
A key point many sellers misunderstand is that the full capital gain is NOT taxed directly.
After all deductions and exclusions:
- The remaining amount is called the net capital gain
- Only a portion of this amount is added to your taxable income
Current Inclusion Rates (Updated):
- Natural persons: 40% of the net capital gain
- Companies and most trusts: 80% of the net capital gain
That portion is then taxed at:
- Your marginal income tax rate (for individuals), or
- The applicable tax rate for companies or trusts
This is why CGT is often significantly higher for companies and trusts than for individuals.
Investment Properties and Holiday Homes
If the property is:
- An investment property
- A rental property
- A holiday home that was not your main residence
Then:
- No Primary Residence Exclusion applies
- The taxable capital gain is much higher
- The overall tax impact is therefore significantly greater
Why Planning Ahead Matters
Capital Gains Tax can have a major influence on:
- Your net sale proceeds
- Your future financial plans
- Your ability to reinvest or purchase another property
Understanding the latest CGT rules before selling allows you to plan properly and avoid unexpected tax consequences after the sale has already been concluded.
Final Notes
- All figures and percentages mentioned are based on current SARS legislation as at March 2026
- Tax laws can change, and every situation is different
- This article provides general information only, not tax advice
For personalised advice, it’s always best to consult a qualified tax practitioner.
If you’re considering selling and would like guidance on the property process itself, you’re welcome to get in touch.
Let’s Talk:
If you’re considering selling and would like guidance on your situation, we’re happy to help.
Lydia & André Vorster
eXp Realty South Africa
📞 082 324 7915
📧 info@PropLA.co.za