When you buy a home in South Africa, the price you agreed on is not the only amount you will pay. Transfer duty — a government tax on the transfer of property — can add tens of thousands of rands to your total cost. Yet many first-time and repeat buyers are caught off guard by it. This guide covers exactly how transfer duty works, the current SARS brackets, a worked example, and the five mistakes SA buyers most commonly make.
What is transfer duty and who pays it?
Transfer duty is a tax levied by SARS on the transfer of fixed property from one person or entity to another. The buyer pays transfer duty, not the seller. It is calculated on the purchase price declared in the deed of sale and must be paid within six months of the date of acquisition.
The payment is processed through the conveyancing attorney handling your transfer — you do not pay SARS directly. The attorney settles the transfer duty from the funds in their trust account before lodging the transfer at the Deeds Office.
What happens if you miss the deadline? SARS charges a 10% penalty on the unpaid amount, plus interest calculated at the prescribed rate. For a R50,000 transfer duty bill, a late payment penalty of R5,000 is significant. Always confirm your attorney has the funds they need well before the six-month window closes.
Transfer duty brackets 2024/25 (SARS official)
The brackets below are the current SARS 2024/25 rates as published on sars.gov.za. The threshold of R1,100,000 means the majority of first-time buyers purchasing in most SA metros fall below the duty threshold or pay relatively modest amounts.
| Property Purchase Price | Transfer Duty |
|---|---|
| R0 – R1,100,000 | 0% |
| R1,100,001 – R1,512,500 | 3% on the value above R1,100,000 |
| R1,512,501 – R2,117,500 | R12,375 + 6% on the value above R1,512,500 |
| R2,117,501 – R2,722,500 | R49,050 + 8% on the value above R2,117,500 |
| R2,722,501 – R12,100,000 | R97,475 + 11% on the value above R2,722,500 |
| R12,100,001 and above | R1,128,600 + 13% on the value above R12,100,000 |
Note: these brackets are for natural persons (individuals). Juristic persons such as companies pay transfer duty at a flat 10% rate on the full purchase price with no threshold exemption.
Worked example: R1,500,000 property
Let's say you are buying a property for R1,500,000. Here is how the transfer duty is calculated step by step.
Step 1: Identify the applicable bracket. R1,500,000 falls in the second bracket: R1,100,001 to R1,512,500.
Step 2: Calculate the amount above the bracket minimum. R1,500,000 − R1,100,000 = R400,000.
Step 3: Apply the rate. R400,000 × 3% = R12,000.
Step 4: Total transfer duty = R12,000. No base amount applies at this bracket entry point.
For comparison, if you were buying at R1,600,000 (which falls into the third bracket): base amount R12,375 + (R1,600,000 − R1,512,500) × 6% = R12,375 + R5,250 = R17,625.
Transfer duty is a significant cash outflow that cannot be included in your bond. Budget for it separately alongside your deposit.
New development exemption
Properties sold by a registered VAT vendor (typically a property developer) are subject to VAT rather than transfer duty. Because VAT is included in the purchase price, no additional transfer duty is payable.
This exemption applies to:
- New residential developments sold directly by the developer
- Off-plan purchases from a developer registered as a VAT vendor
- Commercial properties sold as part of a going concern
How to confirm: Ask your agent or conveyancing attorney to confirm whether the seller is a registered VAT vendor. Your offer to purchase should state whether the price is "VAT-inclusive" — if it is, transfer duty does not apply.
Be careful: not every new development qualifies. A developer who is not a registered VAT vendor, or a second-hand property being resold by a developer, may still attract transfer duty. When in doubt, ask your attorney to confirm in writing before you sign.
First-time buyers: what the rules actually say
A common misconception among South African first-time buyers is that they receive a transfer duty exemption. This is not correct. There is no transfer duty exemption specifically for first-time buyers under current SARS rules. The R1,100,000 threshold applies equally to all buyers.
What about FLISP? FLISP (Finance Linked Individual Subsidy Programme) is a separate government subsidy for qualifying first-time buyers earning between R3,501 and R22,000 per month gross. FLISP provides a lump sum (currently R27,960 to R130,505) applied to reduce your bond — which reduces your interest costs over time. It does not reduce or replace transfer duty. You still pay transfer duty at the standard rate on your purchase price.
The practical implication: if you are buying a R1,200,000 property as a first-time buyer, you owe R3,000 in transfer duty regardless of your FLISP eligibility or status.
5 mistakes SA buyers make about transfer duty
1. Forgetting to budget for it upfront. Transfer duty is not part of your bond — you pay it in cash, typically through the conveyancing attorney. On a R2,000,000 property, that is approximately R36,725 in transfer duty that must come from your own pocket, on top of your deposit.
2. Assuming new developments are always VAT-inclusive. Not every new development is sold by a registered VAT vendor. Always confirm explicitly. An assumption that saves your conveyancing attorney five minutes of checking could cost you tens of thousands of rands.
3. Confusing FLISP with a transfer duty exemption. FLISP reduces your loan amount. Transfer duty is still payable at the standard rate based on your purchase price. These are entirely separate.
4. Not knowing the payment deadline. The six-month clock starts from the date of acquisition (usually when the offer to purchase is signed and accepted), not the date of registration at the Deeds Office — which can be months later. Confirm the deadline with your attorney on day one.
5. Not getting a transfer duty estimate before making an offer. Many buyers discover the transfer duty figure only once they receive the attorney's bill. A quick calculation before you sign — using the brackets above or our Bond Calculator — means no surprises.
Frequently asked questions
Is transfer duty the same as stamp duty?
No. South Africa phased out stamp duty and replaced it with transfer duty under the Transfer Duty Act, 1949. They serve the same general purpose — a tax on the transfer of property — but are different levies. Stamp duty no longer exists in South Africa.
Do you pay transfer duty on a new house?
Not if the developer is a registered VAT vendor and VAT is included in the purchase price. In that case, the sale is subject to VAT and transfer duty is exempt. Confirm with your conveyancing attorney before assuming this applies.
Who pays transfer duty — buyer or seller?
The buyer pays transfer duty. It is the buyer's legal obligation and is paid through the conveyancing attorney's trust account as part of the transfer process. Sellers do not contribute to transfer duty.
Can transfer duty be added to my bond?
No. Transfer duty cannot be included in your home loan. It must be paid from cash savings. This is one reason why the commonly quoted "10% deposit" rule understates the total cash you need at registration — budget separately for transfer duty, bond registration fees, and the attorney's conveyancing fee.
Use the Calcura Bond Calculator to calculate your exact transfer duty, total monthly repayment, bond registration fees, and FLISP eligibility — all in one place.