Friday, 26 August 2011

Transfer Duty and Conveyancing Fees

Transfer duty exemption threshold increased from R500000 to R60000. This is good news to new buyers. This step shows that the government is trying to promote home ownership. Let’s take advantage of this as this is entirely to our benefit.  The government by lowering the transfer duty might be losing revenue but they have new home owners at heart. In short, you will pay less transfer duty if you buy a property valued greater than R600 000.The break down is as follows;
On the value of the property that does not exceed R600 000: 0%
On the value of property that exceeds R600 000, but not R1 000 000.00: 3%.

On the value of property that exceeds R1 000 000.00, but not R1 500 000: R12 000 plus 5% on the value exceeding R1 000 000.00.
On the value of property that exceeds R1 500 000: R37 000 plus 8% on the value that exceeds R1 500 000.

The other costs involved are the conveyance fees, deeds office fee and VAT. The conveyance fees you stand to pay depend on who the conveyance attorney is and how much the property costs. The conveyance attorneys’ rates are generally between 0.7% and 1.2% of the price of the house. The fee levied by the Deeds Office to register the deed to the property in your name, depends on the value of the property, and starts at R 55 per registration and VAT, 14% will apply.

Previously companies, CC’s and Trusts were charged at a flat rate of 8% on the whole purchase price for transfer duty, the above scale will also now apply to them as well as natural persons, which will make a huge difference.
At the same time SARS banned manual transfer duty submissions when the new system went live on April 1 and they have introduced the new SARS Conveyancing service.  
As from the 1st of April 2011 the transfer duty Act No 40 of 1940, requires that all transfer duty application must be submitted electronically to SARS.Conveyancers have become the front office of the South African Revenue Service (SARS) as they have become obliged to check whether contracting parties in a property sale are registered for income tax purposes before transfer duty is processed.

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