African Curiosities

Buying property in South Africa for a foreigner is not too complex. What a foreigner needs to do is initially look for a trustworthy estate broker that will help source a property that's suitable. If you are purchasing for yourself you may approach the owner directly and organise a lawyer to help you with this procedure.

A good estate agent works with commission and only gets any payment on the successful selling for the property. Typically fees is about 6% of the selling price. The seller is the person who pays the commission not the purchaser. The buyer shall be responsible for these transfer costs, for example, legal fees as well as tax.
The buying of property in South Africa must be put into writing, it is known as "an offer to purchase". An offer to purchase or sales agreement has to be signed by both parties and any changes need to be agreed upon by each party.

An offer to purchase normally provides the following information:

1) Price of the property, ie, selling price.

2) Time that the property or home shall be transferred in the buyers name, this often takes around a couple of months.

3) The time which the purchaser wants occupation as well as exactly how much rental to pay if perhaps there will be early occupation

4) An electrical certificate which has to be provided by the seller.

5)A voetstoots clause which usually means the home and property is purchased as it is, therefore check that property first.

6) A fixture and fittings clause, ie, what the property will be sold with.

7) A deposit clause, it is not essential to put down a down payment yet it will show good faith and makes your offer stronger.

These are generally just a couple of of the principal clauses when buying property in South Africa. Within South Africa we have the deeds office which record all of the property ownership. Property record keeping is normally good and accurate within South Africa. Property can be owned individually, collectively in undivided shares or by an entity such as a company, close corporation or trust or a similar entity registered outside South Africa.

The banks in South Africa may loan a non resident of South Africa 50% of the actual purchase value subject to any conditions of the bank, such as finding value for your home.

A non resident is often defined as a someone not residing in South Africa or a south African who has lived overseas for more than 5 yrs in regards to obtaining a bank loan from a loan provider.

The purchaser is responsible of the payment of transfer charges if acquiring property within South Africa and the fees of registering the home loan bond over the property or home purchased.

Transfer costs include transfer duty and conveyance's fees. Transfer duty is calculated as a percentage of the purchase price and varies based on the purchaser’s legal standing. For a legal person it is actually 8% of the buying value. For a natural person the formula is as follows: · For a purchase value price of R0 - R500 000.00, the duty will be 0%. For a buying value of R500 001.00 - R1 000 000.00, the duty will be 5% on the value over R500 000.00 · For a buying price of R1 000 001.00 and greater, the duty will be R25 000.00 + 8% of the price above R1 000 000.00

Conveyances charges, billed by your attorneys for performing the transfer and also registration of mortgage bonds are worked out according to the tariff. Non residents may take home capital from the sale of his or her property as well as the profits, as long as your title deed is stamped non resident, profits may attract capital gains taxes as with all the property or home purchases.

Capital gains tax will be calculated at 25% of the earnings on the sale price of the particular property which then will get taxed at your tax rate on income for the year.

When Buying Property in South Africa non residents should need to register for tax for the year they sell off their property or home. The marginal or greatest tax level is usually 40% in South Africa.

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