WHAT IS TRANSFER DUTY

Transfer Duty is a form of tax which is paid in terms of the Transfer Duty Act when a Purchaser buys immovable property.  This is subject to various exceptions in which case a Transfer Duty Exemption Certificate must be obtained and lodged.

There are various examples of transactions which are exempt from Transfer Duty (Section 9 of the Transfer Duty Act).  The most common example is where the Seller is registered for VAT. (in such instance the Purchaser does not pay Transfer Duty)

WHO ISSUES THE TRANSFER DUTY RECEIPT

SARS issues the Transfer Duty Receipt or Transfer Duty Exemption Certificate after receiving the necessary documents and payment of funds from the Conveyancing Attorneys.

TRANSFER DUTY: FURTHER ISSUES

The Seller and Purchaser are required to sign declarations (at the conveyancers) to the effect that the purchase price for which the property was sold is a market related price.

In terms of the Transfer Duty Act SARS is entitled to be paid Transfer Duty on the “Fair Value” of the property.  In most instances the purchase price is the “Fair Value”, SARS however may call for valuations to confirm this.

The SARS declarations call for a disclosure of the parties income tax numbers and for various tax information related to the sale and Capital Gains Tax.  One of the functions of SARS in issuing transfer duty receipts / exemption certificates is to monitor the tax status of all the parties involved in the transaction.

Any outstanding tax issues a party to a transaction may have with SARS will have to be resolved before Transfer Duty Receipts are issued, and this could create delays in the transfer process.

Both Sellers and Purchasers should be encouraged to resolve any outstanding tax issues with SARS at an early stage, to avoid delays.

WHY IS A TRANSFER DUTY RECEIPT NECESSARY

When documents for the transfer of property are lodged in the Deeds Office, it is a requirement that a Transfer Duty Receipt or Transfer Duty Exemption Certificate be lodged.  The Deeds Office will not register the transfer unless this document is lodged.  In other words, the Deeds Office acts as a policeman on behalf of SARS to ensure that the Transfer Duty Act is complied with.

HOW MUCH TRANSFER DUTY IS PAYABLE

The rate at which Transfer Duty is paid is determined by the Minister of Finance in the budget speech each year and is as follows from 23 February 2011:

These rates are applicable to individuals, Companies, Close Corporations and Trusts.

All Purchasers: (sliding scale)	R0-R600 000.00	nil %
	R600 001.00-R1 000 000.00	3%          (max of R12 000.00)
	R1 000 001.00-R1 500 000.00	5%          (max of R37 000.00)
	R1 500 001 upwards	8%          (Plus R37 000.00)

EXAMPLES:  MATTERS CONCULDED FROM 23 FEBRUARY 2011

Purchase Price:     R590 000.00                                                                           =nil as below threshold

 

Purchase Price:     R720 000.00

-R0-R600 000.00                             nil as exempt                                        nil

-R600 001.00 – R720 000.00                  x 3 % of R120 000.00                                 R3 600.00

Total transfer duty:                                                                                                                      R3 600.00

 

Purchase Price:     R1 400 000.00

-R0-R600 000.00                           nil as exempt                                       nil

-R600 001.00 – R1 000 000.00              x 3 % on R400 000.00                                R12 000.00

-R1 000 001.00 – R1 400 000.00           x 5 % on R400 000.00                                R20 000.00

Total transfer duty:                                                                                                                        R32 000.00

 

Purchase Price:     R1 800 000.00

-R0-R600 000.00                                           nil as exempt                                                   nil

-R600 001.00 – R1 000 000.00              x 3 % on R400 000.00                               R12 000.00

-R1 000 001.00 – R1 500 000.00           x 5 % on R500 000.00                               R25 000.00

-R1 500 001.00 – R1 800 000.00           x 8 % on R300 000.00                               R24 000.00

Total transfer duty:                                                                                                                       R61 000.00

 

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