How much will you save with no transfer duties for properties less than R1.1m?
Are you planning to buy property that costs less than R1.1-million? This is how much you will be saving, thanks to the recent announcement by the Finance Minister to scrap transfer duties for properties that cost less than R1.1-million.
South African property buyers were relieved to hear Finance Minister Enoch Godogwana announce that from 1 March 2023, there will be no transfer duties for properties less than R1.1 million. He said this during his 2023 budget speech in Cape Town on 22 February.
Property Practitioner, Jabulile Lefu of JacquesLouw Properties, says the announcement comes as a sigh of relief for many South Africans who were planning to buy properties within that price range, as they will be able to save thousands of Rands.
READ: No transfer duties for properties less than R1-million
How much will the purchaser save?
"Until 28 February 2023, properties sold for R1,000,001 & higher were subject to transfer duty. That threshold has now been lifted to R1,1million. From 1 March 2023, there will be no transfer duties for properties up to R1.1 million. Instead, properties sold for between R1,100,001 and R1,512,500 will have to pay 3% of the value above R1.1 million. Therefore, the first R1.1 million of any property purchase price is now tax-free. Now, as of 1 March 2023, purchasers will save around R3.000 when buying for R1,100,000," said Lefu.
But the expert warns that this does not in any way affect other fees associated with purchasing property.
She says "attorney costs are still payable, only the transfer duty which is the government tax will not be payable for that amount".
The property practitioner says buyers can use the money they have saved elsewhere.
“Every saving counts, so if purchasers are able to save R3,000 on a property they would like to purchase, then it is money they can use elsewhere."
READ: COVID-19: The pros and cons of buying property during tough economic times
The news comes as a relief as South Africans are still battling with the high interest rate which has affected the property market.
"What we are seeing now with the interest rate going up is that we have a few purchasers," says Lefu.
"The interest rate is at a high of 10.75%," she adds.
However, the property practitioner is hopefully that things will improve in the coming months.
"All indications are that in a few months time the interest rates is most likely to start decreasing. We don’t know by how much, but we are hoping that inflation should start declining soon, which in turn should have a positive effect on the interest rates, giving home owners some relief & making it more affordable for first-time buyers."
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