Qu. Are foreigners allowed to buy property in South Africa?
Ans. Yes

Qu. Can foreigners borrow in South Africa to finance the purchase?
Ans. Yes, but restricted to a maximum of 100% of the funds introduced from offshore.

Qu. Can I take my money out if I sell the property?
Ans. Yes, plus profit if you are not a resident for exchange control purposes. Any money introduced can be repatriated even by a resident, but restricted to the rand value when introduced.

Qu. Will I be taxed in South Africa on the gain arising on sale?
Ans. Yes, non-tax residents and residents are subject to tax on the sale of immovable property in South Africa. Tax residents may claim a primary residence exclusion of R 1million of the gain.

Qu. What is the tax rate applicable to capital gains?
Ans. For individuals 25% of the gain is added to taxable income, and taxed at the relevant marginal rates. The highest tax rate is currently 40%, which means the highest rate of tax on capital gains is 10%

Qu. What will be the rate if I hold the property through a company or trust?
Ans. 50% of the gain will be taxed at a flat rate of 30% for a company and 40% for a trust. In addition, a company will pay secondary tax on companies at 12.5% on any dividend declared. Effective rate is therefore 15% (+STC) for a company and 20% for a trust. No primary residence exclusion is available.

Qu. If I let my SA property whilst away, is that income taxable in South Africa?
Ans. Yes, South African source income is taxable in the hands of a non-resident. There will also be a registration requirement, and you may be required to submit a tax return.

Qu. What is the rate of transfer duty and is it applicable to shares in a company/CC?
Ans. The rate of transfer duty on transfer to an individual is 0% on first R140,000, 5% on the amount between R140,001 and R320,000, and 8% above R320,001. A flat rate of 10% is chargeable on transfers to a trust or company. Transfer duty is also payable where shares in a company, a members’ interest in a CC or a beneficiary interest in a trust is transferred if the main asset of the trust, company or CC is residential property.

Qu. Is VAT payable ?
Ans. Yes if purchased from a VAT registered vendor such as developer, however, no transfer duty will then be payable.

Qu. Will property ownership guarantee me the right to live in South Africa?
Ans. No, a person must follow appropriate immigration procedures.

Qu. Will property ownership assist with immigration procedures ?
Ans: Yes, the amount invested and the rental value of the property may be taken into account in order to satisfy certain of the financial criteria for long term visitors permits or certain categories of permanent residence.

Qu. If I buy a guest house/farm can I own and operate that business in South Africa ?
Ans: Yes, but you will need a business permit if you will run the business from South Africa. No permit is required if your involvement in the business is solely that of an investor.

For more details please contact:

Alan Seccombe (tax and exchange control) – PricewaterhouseCoopoers
021-529-2366 or 082-457-5920 or alan.seccombe@za.pwc.com
Linda Lamprecht (immigration) – PricewaterhouseCoopers
021-529-2672 or 082–929-8116 or Linda.lamprecht@za.pwc.com