Page 9 - Nexia SAB&T Property and Tax Guide 2025

PRIMARY RESIDENCE EXCLUSION
When a primary residence is disposed of capital gains up to R2 million is exempt from
CGT. The following are the main provisions relating to primary residences:
◆ The exemption is applicable to natural persons and special trusts.
◆ Only one residence at a time may be a primary residence of a person.
◆ The exemption is applicable if a person merely has an interest in the residence. As
a result a share in a share block company and a usufruct may qualify (subject to
further provisions).
◆ If the residence is held by more than one person as a primary residence an
apportionment of the R2 million must be made in relation to their interest.
◆ An apportionment of the profit must be done if the person used the house as a
primary residence for only part of the time it was owned. If a person was absent
from the residence for less than 2 years as a result of the residence being offered
for sale and vacated due to the intended acquisition of a new primary residence,
the residence being erected on land acquired, the residence being accidently
rendered uninhabitable or the death of that person, it will not be seen as an
absence from the residence.
◆ When the residence is used partially for residential and partially for business
purposes an apportionment must be done.
◆ If a person is absent from his residence for a continuous period of 5 years or less
and lets the premises during this time, the absence will be ignored if the person
stayed in the residence for a period of at least one year before and after the
period it was let, no other residence was treated as a primary residence during
this period and the person was absent from the residence due to being absent
from South Africa or was employed or engaged in a business in South Africa at a
location more than 250 kilometers from the residence.
◆ Where the residence is more than 2 hectares in size, the exemption only applies
to the gain made on the residence and 2 hectares, provided that the land is used
mainly for domestic or private purposes together with the residence and the land
is disposed of at the same time and to the same person who buys the residence
(this land could be unconsolidated and next to the residence to qualify).

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