A property sale in South Africa carries either VAT or transfer duty, never both. Which one applies depends on the seller, not on you.
When transfer duty applies
Most homes are bought from private individuals who aren't registered for VAT, or who aren't selling as part of a business. These sales carry transfer duty, which the buyer pays to SARS within six months of acquiring the property, on SARS's sliding table: nothing on the first R1,210,000, then 3% up to 13% on the higher bands.
When VAT applies instead
If the seller is a VAT vendor and sells the property in the course of their business, the sale is a taxable supply and carries VAT at 15%. Typical examples are a property developer selling new homes, or a business selling a commercial building it used in its VAT-registered enterprise. In these sales no transfer duty is due.
The VAT is normally included in the price you're quoted, so a "VAT included" price of R2,300,000 already contains R300,000 of VAT (15/115 of the price). It's the seller who pays that VAT over to SARS.
Why it matters to you
- The cost is in the price, not on top. With a VAT sale you don't pay transfer duty on top of the price.
- Check the offer to purchase. It should say whether the price includes VAT. If it doesn't, and the seller turns out to be a vendor, there can be an argument about who bears the VAT.
- If you're a VAT vendor buying for your business, you may be able to claim the VAT back as input tax, which isn't possible with transfer duty. Take advice.
A quick test
Ask the seller, or the estate agent, two questions: Is the seller registered for VAT? And is the sale part of their business? If both answers are yes, expect VAT and no transfer duty. Our transfer duty calculator has a switch for exactly this.
An example
A developer sells you a new flat for R2,300,000, VAT included. The price contains R300,000 of VAT, which the developer pays to SARS, and you pay no transfer duty. A private seller sells you the flat next door for the same R2,300,000. There's no VAT, but you pay transfer duty: R13,614 + 6% of R636,200 = R51,786, on top of the price. Same price, different total cost.
Sources
This is general information, not tax, legal or financial advice.