This post reflects my basic research on the issue.
Please note This is NOT tax or financial advice please consult you advisors if necessary.
Foreigners are liable for the payment of CGT on the disposal of any immovable property.
There is a 5% withholding tax levied unless you obtain a directive from SARS before transfer. The directive will allow a lesser amount to be deducted depending on the details of the sale – so it would make sense to obtain advice regarding the directive before transfer.
Where properties are owned by individuals or special trusts, 33 percent of the capital gain must be included in the taxable income
A capital gain is calculated by deducting the cost of a property from the proceeds of the disposal of the property. The following are included in the cost:
- The cost of acquiring a property, including the purchase price, transfer cost, transfer duty, VAT and professional fees.
- The costs of improvements, alterations, renovations and so forth. This will only be accepted if you have receipts or invoices.
- The cost of disposing of the property, including the agent’s commission, advertising costs, valuation costs (including valuing the property for CGT purposes) and professional fees.
Expenditure on repairs, maintenance, insurance and rates and taxes is not included in base costs.
It is essential to keep accurate records of these costs. If records are not kept, no deduction will be allowed from the proceeds to determine the capital gain. Records must be kept for four years from the date of submission of the income tax return for the year in which the capital gain or loss is reflected.