Page 38 - Nexia SAB&T Property & Tax Guide 2022

COSTS OF BUYING & SELLING PROPERTY

TYPICAL COSTS OF BUYING

PURCHASE PRICE
◆ A deposit (usually 10% of the gross purchase price) to the estate agent or conveyancer
payable usually on signature of the deed of sale by both parties or within 7 to 14 days
from signature (if applicable).
◆ The balance of the purchase price is lodged with the conveyancer prior to transfer, or is
secured by way of a bank guarantee. Over and above the purchase price, the purchaser
should have the cash available to cover the transfer costs (if this is not included in the
bond) and the bond registration costs as follows:
TRANSFER COSTS
◆ Transfer duty – calculated on a sliding scale between 0% to 13% of the gross purchase
price, is payable to SARS. (R0 to R1 000 000 is exempt).
◆ If the seller is a VAT vendor, then VAT is payable at 15% of the purchase price from
1 April 2018. As the seller is liable for payment, it is important to add the VAT to the
purchase price, and to state clearly whether the agreed purchase price includes or
excludes VAT. If nothing is stated, it is deemed to be inclusive of VAT, and the seller will
be liable for VAT at the “tax fraction” (which equates to 13.04% of the gross price).
◆ The transaction may be zero-rated only when an income generating entity, which is also
a going concern, is sold from a VAT vendor to a VAT vendor.
◆ Conveyancing fees – of the transferring attorney, may vary slightly according to rates
set by the conveyancer who attends to the transfer, but are based on recommended
fee guidelines from the law society (plus VAT).
◆ Bond registration costs – the purchaser normally pays the transfer and bond
registration costs (plus VAT).
◆ Other costs – the bank may also charge a bond initiation fee – usually a base fee plus
% of the loan amount, which is usually debited off home loan account. A homeowners
insurance policy (to cover property and structures on it against natural disasters), home
loan protection assurance (death, disability), moving costs, and telephone and internet
connection costs may also need to be taken into account.

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