Selling a house? Capital gains tax (CGT) on property in South Africa

Capital gains tax (CGT) is the tax you pay when you sell a property for more than you paid for it. It is not a separate tax: 40% of the gain is added to your taxable income and taxed at your normal income-tax rate, after exclusions, which is where the primary-residence exemption does its work.

The tax lives in the Eighth Schedule to the Income Tax Act 58 of 1962, and the calculation always runs the same way:

1. Proceeds: the selling price, minus selling costs such as estate-agent commission, conveyancing fees and bond cancellation costs.
2. Base cost: what you paid for the property, plus transfer duty, purchase-side attorney fees and the cost of capital improvements (an extension, a new roof) for which you have invoices.
3. Capital gain: proceeds minus base cost. No gain, no tax: an assessed loss on a property sale cannot be set off against your salary.
4. Exclusions: the primary-residence exclusion (R 3 000 000) and the annual exclusion (R 50 000) come off the gain.
5. Inclusion: 40% of what remains is added to your taxable income and taxed at your marginal rate, which caps the effective rate at 18%.

Companies and trusts follow the same shape with different numbers: an inclusion rate of 80% and no annual exclusion, giving maximum effective rates of 21.6% for companies and 36% for other trusts.

For most South African home sellers the honest answer is nothing: a typical mid-market primary residence sells at a gain far below the R 3 000 000 exclusion. Tax starts when a gain exceeds the exclusions: then it is 40% of the excess, taxed at your income rate, capped at an effective rate of 18%. The two examples below therefore use properties above the mid-market, because that is where the mechanism actually produces tax.

The primary-residence exclusion removes the first R 3 000 000 of the gain when you sell your main home (disposals on or after 1 March 2026, in the 2027 year of assessment). It applies to the gain, not the selling price, and only where the owner is a natural person or special trust: a home held through a company or an ordinary trust does not qualify.

Which figure applies to you turns on the date of disposal (when the sale agreement is concluded or its suspensive conditions fulfilled), not the transfer or registration date, and not any “effective date” written into the contract. A sale concluded in February 2026 falls under the old R 2 000 000 even if it registers in April.

Two limits worth knowing. First, the exclusion is per home, not per owner: a couple selling their joint primary residence shares one R 3 000 000. Second, the exclusion assumes the property is genuinely your residence: used mainly for domestic purposes. If part of the home was used exclusively for business, or you had already been treated as using another residence as your primary one, the exclusion is reduced; a registered tax practitioner can confirm your position.

Three amounts are exempt per year for a natural person in the 2027 year of assessment: the first R 3 000 000 of a primary-residence gain, the first R 50 000 of any other gain, and, in the year you die, R 440 000 instead of the annual exclusion. Companies and other trusts get no annual exclusion at all.

Verified against the SARS CGT rates page (Last Updated 26/02/2026) on 15 October 2026. All three increases were announced in the February 2026 Budget and apply through the Budget-announcement mechanism explained above.

One deliberate omission: this page does not list the small-business exclusions. Several incumbent guides are quoting outdated small-business figures as current, and we could not verify current values against a primary source in time for this page; rather than repeat a stale number, we leave them out. If you are selling a business premises, ask a registered tax practitioner for the current figures.

You pay no capital gains tax when the gain, after selling costs, falls entirely inside your exclusions, which covers most mid-market primary residences. You also pay nothing when there is no gain at all: an assessed loss on a property sale cannot be set off against your salary or other income.

Concretely, the R0 outcomes look like this:

• The mid-market primary residence. Bought at R1 200 000, sold at R2 300 000, roughly R1 000 000 of gain after costs, fully inside the R 3 000 000 exclusion, so R0 CGT. This is the honest finding most incumbent guides bury: the average South African sale produces no CGT at all.
• The gain inside the annual exclusion. A small gain on an investment property (under R 50 000 after costs) falls inside the annual exclusion and owes nothing.
• No gain, no tax. If proceeds after selling costs do not exceed base cost, there is nothing to tax, and the shortfall is an assessed loss that cannot be set off against other income.

One trap to avoid: the exclusions apply to the gain, not the selling price. A home bought for R500 000 decades ago and selling for R4 000 000 has a gain far above R 3 000 000, so the R0 outcome is not automatic, it depends on the numbers.

There is no “6-year rule” in South African capital gains tax; that is the Australian main-residence rule. The South African equivalent is paragraph 48 of the Eighth Schedule: a two-year absence allowance when you move between homes, and a separate set of conditions for a home let out while you are away.

Under paragraph 48, you are treated as still ordinarily resident in your home during an absence of up to two years where the absence happens for a specified reason: your old home is being sold after you move into a new one, a new home is being built on land you acquired, your residence was accidentally rendered uninhabitable, or the absence follows a death. The provision also permits a two-year overlap where you hold two residences at once.

For a home let out while you are temporarily absent, the residence can still count as used for domestic purposes (keeping the primary-residence exclusion alive) if conditions including these are met: the absence does not exceed five years; you were absent from South Africa or employed more than 250 km from the residence; you resided in it for at least a year before and at least a year after the absence; and no other residence was treated as your primary residence during that time.

If you are a non-resident selling South African property, the buyer must withhold part of the selling price under section 35A: 7.5% where the seller is a natural person, 10% for a company and 15% for a trust, once the total amount payable exceeds R 2 000 000. It is an advance, not your final tax.

No withholding while the total amount payable to the seller is R 2 000 000 or less; once the threshold is exceeded, the percentage applies to the full selling price. Verified 15 October 2026.

Two things non-resident sellers should know. First, the withholding is a prepayment against your actual CGT: your final liability is assessed on the real gain, and any excess is refunded after assessment. Second, the seller can apply on form NR03 for a directive to withhold at a lower or zero rate under section 35A(2), worth doing where the withholding would far exceed the eventual tax. These rates have been unchanged in recent amendments.

Your bond settlement does not create CGT, but it changes the numbers: the outstanding balance is deducted from the selling price, and selling costs (estate-agent commission, the bond cancellation attorney’s account) reduce your capital gain. Every rand of legitimate selling cost is a rand on which you never pay CGT.

In the worked example above, the R5 000 bond cancellation allowance and the R373 750 commission together cut the taxable gain by nearly R379 000 — which at the maximum effective rate of 18% is roughly R68 000 of tax that never arises. The bond cancellation costs guide breaks down those settlement-day costs line by line, and the transfer cost calculator budgets the buying side of your next move.

One open question we will not answer dishonestly: whether bond registration costs from the original purchase count toward base cost. The verified sources for this page do not settle it, so we state no position; a registered tax practitioner should confirm your specific case rather than you relying on either answer.

SARS requires you to keep the records that prove your base cost and your selling costs: the original purchase agreement and transfer duty receipt, attorney and conveyancing accounts, invoices for capital improvements, the estate-agent’s commission account and the bank’s settlement figures. When SARS asks, you are the one who has to produce them — an undocumented improvement is worth R0 as base cost.

• From the purchase: the deed of sale, transfer duty receipt (or SARS transfer duty receipt confirmation), conveyancing attorney account, and the bond registration documents.
• During ownership: invoices and payment proof for every capital improvement (extensions, renovations, structural work). Repairs and maintenance do not count as base cost; improvements that form enduring assets to the property do.
• From the sale: the sale agreement (its date fixes which exclusion figure applies), the estate-agent’s commission account, conveyancing fees, and the bank’s bond settlement statement.

Keep the sale-side records well beyond registration; they are what the CGT return is computed from, and the assessed position can be revisited. A folder opened on the day you buy, and added to as you improve, is the cheapest tax preparation you will ever do.

Every figure on this page was verified against SARS primary sources on 15 October 2026, and the worked examples rest on stated assumptions. This section lists them so you can see exactly where the estimates bend, and what would change the numbers.

• The estimates are ceilings. Worked examples and the estimator apply the top marginal income-tax rate of 45% (top bracket, taxable income above R1 878 600), giving the maximum effective rate of 18%. At a lower marginal rate, you pay less.
• The 2027 exclusions rest on the Budget-announcement mechanism. The R 3 000 000, R 50 000 and R 440 000 figures are in force now via paragraph 45(1A) of the Eighth Schedule, pending formal enactment. When the Taxation Laws Amendment Bill is promulgated, we re-verify that all three made it into the enacted Schedule, and update this page if anything moved.
• Not tax advice. This guide is general information. Your actual liability depends on your full tax position; a registered tax practitioner or SARS confirms it, not a website.
• No credit impact from reading. Nothing on this page touches your credit record. The estimator stores only a broad price band; note, though, that a formal home loan application involves a bank credit check, which a lender does record.

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