| |
Property purchase as a foreigner in Cape Town, South Africa
Can I buy a property in South Africa as a non-resident?
What costs do I have to pay when purchasing a property in South Africa?
How much is Transfer Duty?
How long does it take to buy property?
What happens if I change my mind?
How do I know that the property is a good buy and there are no major faults with it?
What amount of deposit must I pay?
Will I be taxed on any income from renting my property out?
Will I be taxed (Capital Gains) on any profit I make?
Will I be able to transfer my money back abroad if I sell my property?
What is involved in buying a guest house?
Getting professional help
Can I buy a property in South Africa as a non-resident?
Non residents are freely available to purchase property in Cape Town, South Africa. In fact many of our clients that purchase property in Cape Town do so as an investment, holiday home or future retirement property.
Property finance is also available to non-residents. They can finance a property in Cape Town for up to 50% of the purchase price of the property. However, the other 50% needs to be paid in cash from a foreign bank. A non-resident is allowed to rent out the property to generate a rental income.
Recent press speculation has hinted at new regulations surrounding the purchase of property by non residents in South Africa. Whilst most countries currently have some form of regulation in place, South Africa currently does not.
Back To Top
What costs do I have to pay when purchasing a property in South Africa?
There are 3 main costs to consider when purchasing property in South Africa
- The cost of the transferring attorney that will be transfer the property into the names of the purchaser and managing the transfer process
- The cost of the Transfer Duty
- The cost of obtaining Property Finance, which includes the bond registration costs and the attorney.
Back To Top
How much is Transfer Duty?
The Transfer Duty in South Africa varies depending on the entity you are purchasing the property in and purchase price of the property.
If you are purchasing a property in your personal name the costs range between 5 to 8% of the purchase price. (This amount does included the cost of the transferring Attorney)
| Example: | Purchase Price | R 2 500 000.00 |
| Transfer Costs | R 164 000.00 |
If you are purchasing the property in a Trust, CC or any company, the costs are between 8-10% of the purchase price. (This amount does include the cost of the transferring Attorney)
| Example: | Purchase Price | R 2 500 000.00 |
| Transfer Costs | R 227 000.00 |
Please note that the Transfer Duty / costs do not include the costs involved in obtaining finance on a property.
Back To Top
How long does it take to buy property?
Once you have selected a property in South Africa that you would like to purchase and the offer has been accepted the transferring process can move ahead quite quickly and can take between 6 weeks to 2 months to transfer the property into the purchaser’s name. However if there are conditions on the offer to purchase that need to be fulfilled then the process can take a lot longer - up to 3 to 6 months depending on what the conditions are.
Back To Top
What happens if I change my mind?
Once an offer to purchase has been signed by the purchaser and accepted by the seller you cannot cancel the agreement. You cannot change your mind at a later stage. If you try and cancel the contract or breach the offer to purchase in any way, you can be sued for damages by not only the seller but the seller’s agents too.
Back To Top
How do I know that the property is a good buy and there are no major faults with it?
In order to know that the property is a good buy you need to know the area very well and have a good knowledge of the selling prices of the properties is this area. It is not the responsibility of the seller to ensure there are no faults on the property but is the responsibility of the purchaser to inspect the property and ensure there are no major faults on the property. It is best to get an expert to advise you on these issues.
Back To Top
What amount of deposit must I pay?
The deposit is usually 10% of the purchase price. This deposit is held in an interest bearing trust account and the interest is for the benefit of the purchaser. However, it is not compulsory to pay a deposit on a property.
Back To Top
Will I be taxed on any income from renting my property out?
Yes, you will be taxed on the rental income from your property and it is best to get the advice of a tax expert on this issue to assist you.
Back To Top
Will I be taxed (Capital Gains) on any profit I make?
You may have to pay capital gains tax on profit you make when you sell your property. There are certain exeptions that may apply – such as whether it is your primary residence or not – depending on your personal circumstances, and again, it is best to get a tax expert to advise and assist you.
Back To Top
Will I be able to transfer my money back abroad if I sell my property?
Yes, in most circumstances you are able to transfer your money, including any profit that you have made, back overseas once you have sold your property. However, first you may need to pay the capital gains tax and you must be able to prove that the money you purchased the property with came from abroad.
Back To Top
What is involved in buying a guest house?
When purchasing a guest house, you will have to follow the same procedures as purchasing any property in South Africa. However, if the guest house is being sold as a business, then it is best to ensure that you get a copy of the financials so that you can establish whether there is any value in the amount allocated to the business side of the guest house. Most of the guest houses sold very often include the furniture, linen etc, it is best to have a written inventory of the items included and this inventory must form part of the offer to purchase. It is also advisable to insist on getting written permission to run a guest house from all of the neighbours, even if the property has been running as a guest house in the past, as all new owners have to apply for a name change on the guest house departure.
Back To Top
Getting professional help
|
|
|
|
