We get asked this almost every week: "how much are transfer costs going to be?" and "what's this transfer duty thing?" People tend to use the two terms as if they mean the same thing, but they don't. One is a tax, the other is a fee, and mixing them up is probably the single most common budgeting mistake we see buyers make. So let's sort out what's what.
Transfer duty: the tax you pay to SARS
Transfer duty is a government tax. You pay it to the South African Revenue Service when you buy property, and it's worked out on a sliding scale based on the purchase price (or the market value, if that happens to be higher). It's the buyer who's on the hook for it, not the seller, though in practice your conveyancing attorney takes care of getting it paid to SARS as part of the transfer.
Here's the good news: if you're buying anything at R1,210,000 or under, you owe nothing. Above that, the rate climbs in steps:
Property value (R) Marginal rate
0 – 1,210,000 0%
1,210,001 – 1,663,800 3%
1,663,801 – 2,329,300 6%
2,329,301 – 2,994,800 8%
2,994,801 – 13,310,000 11%
Above 13,310,000 13%
It's a stepped system, not a flat one, so you're not taxed at one rate on the whole price. Only the portion of the price sitting inside each bracket gets taxed at that bracket's rate.
Let's make it concrete. Say you buy a home for R2,000,000. The first R1,210,000 costs you nothing. The next R453,800 is taxed at 3%, which comes to R13,614. The remaining R336,200 falls into the 6% bracket, adding R20,172. Add it up and you're looking at R33,786 in transfer duty. Go bigger, say a R5,000,000 purchase that pushes into the 11% bracket, and you're paying R327,356. That's a big enough jump that it's worth doing this calculation properly rather than guessing at a rough percentage.
One thing that trips people up: transfer duty and VAT are never charged together. Buy a brand-new unit straight from a developer, and you'll pay VAT instead, already baked into the price, with no separate transfer duty on top. That's why some new developments advertise themselves as "no transfer duty."
Two more things worth knowing. There's no special rate for first-time buyers — everyone gets the same R1,210,000 tax-free threshold, though it's often assumed to be a first-time buyer perk. And there's a deadline: transfer duty has to be paid within six months of the date you're deemed to have acquired the property, and the Deeds Office simply won't register your transfer until SARS confirms it's been paid. Miss the window and interest starts accruing.
Transfer costs: what you pay your conveyancer
Transfer costs are a different animal altogether. This is what you pay your conveyancing attorney for the legal work of actually getting the property registered in your name. It has nothing to do with SARS, and you'll owe it no matter what the purchase price is.
Broadly, it covers:
- The attorney's own professional fee, worked out on a sliding scale (set by the profession's own fee guidelines, not by SARS)
- Deeds Office lodgement, registration and search fees
- A rates clearance certificate from the municipality
- Postage, petties and courier costs between the various offices involved
- FICA and other compliance charges
Here's the part people often miss: even if your purchase price is under R1,210,000 and you owe zero transfer duty, you'll still need to budget for transfer costs. And if you're taking out a bond, there's yet another attorney and another set of fees for bond registration, separate again from both of the above.
So, what's the takeaway?
It's an easy mix-up to make. Both costs show up around the same time, in the same transaction, and people lump them together in conversation as "transfer costs" without thinking twice. But they're really two separate line items in your budget: one's a tax, one's a fee, and you'll want to plan for both alongside your deposit and any bond costs. Your conveyancing attorney should be able to give you the full breakdown as soon as your offer to purchase is signed, so it's worth asking early rather than being caught off guard later.
