Buying a home is exciting! But beyond the purchase price and your home loan, there are crucial extra costs. Budgeting for these upfront ensures a smooth, stress-free transaction.
Let's break down the main costs buyers face when purchasing property.
Key Costs to Budget For:
1. Transfer Duty (SARS Tax)
This is a tax paid to SARS on property acquisition, calculated on a sliding scale based on the purchase price.
- Who pays? The buyer.
- Exemption: Properties R1,210,000 or less are exempt (as of April 1, 2025). For properties above the threshold, the duty is calculated as a percentage of the value exceeding the threshold, with higher percentages for more expensive properties.
- VAT vs. Transfer Duty: If buying a new property from a VAT-registered developer, you pay VAT (usually included in price) instead of transfer duty.
2. Conveyancer Fees (Legal Fees for Transfer)
These are paid to the transferring attorney for legally transferring the property into your name.
- Who pays? The buyer.
- Regulation: Fees are guided by the Legal Practice Council (LPC) tariff, based on the property's purchase price.
- What's included? Drafting documents, liaising with banks and the Deeds Office, FICA compliance, and managing the overall legal transfer. Small disbursements (Deeds Office fees, etc.) are also included.
3. Bond Registration Costs (If You Have a Home Loan)
If you're getting a home loan, these cover the legal process of registering that loan against the property.
- Who pays? The buyer is responsible for these costs, which are paid to the bond registration attorney (appointed by your bank).
- Components: These costs include the bond registration attorney's fees (also based on a sliding scale according to the bond amount), Deeds Office fees for registering the bond, and a bank initiation fee (a once-off fee charged by the bank for processing your loan).
- Fixed Fees: While scaled, these fees are also regulated and depend on the value of your bond.
Other Potential Costs:
Also consider these smaller, but important, expenses:
- Bank Valuation Fee: Your bank might charge a fee to value the property before approving the loan.
- Occupational Rent: If you move into the property before the transfer is registered, you'll likely pay occupational rent to the seller.
- Pro-rata Rates & Levies: You may be required to pay an advance portion of municipal rates/taxes or complex levies to ensure the accounts are clear for transfer.
- Homeowners Association (HOA) Consent Fee: If the property is in an estate or complex with an HOA, there might be a small fee to obtain their consent for the transfer.
Planning Your Budget
It's clear that the total additional costs can add a significant amount to your property purchase. To avoid any surprises, we highly recommend:
- Getting Pre-Approved: Understand what home loan amount you qualify for.
- Using a Cost Calculator: Many online tools (and your conveyancer) can provide an estimate of your total transfer and bond costs based on the property price.
- Consulting Your Conveyancer Early: The best way to get an accurate breakdown is to speak to a conveyancing attorney directly.
Contact your conveyancing attorney for clear, professional guidance for your property purchase.
