Buying property in South Africa comes with more than just the purchase price. One of the most significant additional expenses is transfer duty—a tax levied by SARS (the South African Revenue Service) when ownership of immovable property changes hands. Many buyers underestimate or misunderstand this cost, which can lead to financial miscalculations or delays in registration. Knowing how transfer duty is calculated, when it’s due, and how it differs from other costs like transfer fees is critical for anyone entering into a property transaction.

Transfer duty is often confused with transfer fees, but the two are not the same. While transfer duty is a tax paid to the government, transfer fees refer to the professional legal fees paid to a conveyancing attorney for managing the legal transfer of ownership. Both are payable during the transfer process, but they serve very different purposes. 

What is Transfer Duty?

Transfer duty is a government tax payable to SARS when property is acquired by way of sale, donation, exchange, or in certain cases, as part of a company restructuring. It applies to all natural persons (individuals) and entities such as trusts or companies when acquiring immovable property in South Africa, unless the transaction is subject to VAT.

Legally speaking, the obligation to pay transfer duty lies with the purchaser, and the amount is calculated based on the property’s purchase price or market value, whichever is higher. Payment must be made before the property can be registered in the new owner’s name at the Deeds Office. The transfer duty receipt from SARS is one of the mandatory documents in the property transfer process.

Notably, transfer duty is not applicable if the seller is a VAT vendor and the transaction is subject to VAT. In such cases, VAT replaces transfer duty. However, this distinction is often overlooked by buyers—particularly in commercial or developer sales—leading to confusion. A competent conveyancing attorney will ensure the correct tax treatment is applied from the outset to avoid double payment or registration delays.

The transfer duty regime is governed by the Transfer Duty Act 40 of 1949, and SARS updates the applicable thresholds and rates annually, typically in line with the National Budget. Understanding these thresholds is key to estimating your total property acquisition cost, especially in the middle- to high-end residential market.

How is Transfer Duty Calculated?

The South African Revenue Service (SARS) uses a sliding scale based on the value of the property. The calculation is not a flat percentage across the board but instead increases progressively according to brackets defined in the national budget.

The SARS Transfer Duty Sliding Scale (As of 2024/2025)

Here is a simplified version of the current sliding scale applicable to natural persons:

• 0% on property valued up to R1,100,000
• 3% on the value above R1,100,000 up to R1,512,500
• 6% on the value above R1,512,500 up to R2,117,500
• 8% on the value above R2,117,500 up to R2,722,500
• 11% on the value above R2,722,500 up to R12,100,000
• 13% on the value exceeding R12,100,000

Worked Example: Property Purchase of R2,500,000

Here’s a basic example to illustrate how SARS applies the sliding scale:

1. The first R1,100,000 is taxed at 0% = R0
2. The next R412,500 (R1,512,500 – R1,100,000) is taxed at 3% = R12,375
3. The next R605,000 (R2,117,500 – R1,512,500) is taxed at 6% = R36,300
4. The remaining R382,500 (R2,500,000 – R2,117,500) is taxed at 8% = R30,600

Total transfer duty = R12,375 + R36,300 + R30,600 = R79,275

What Value is Used to Calculate Transfer Duty?

SARS will use either the purchase price or the fair market value of the property—whichever is higher. This rule ensures that properties aren’t undervalued in sale agreements to avoid tax. If SARS suspects an undervaluation, it may initiate a reassessment and demand payment based on its estimated value.

When is Transfer Duty Payable?

Transfer duty must be paid within six months from the date of the sale. If payment is late, SARS imposes penalties and interest. The conveyancing attorney handling the transaction typically ensures that payment is made and that the official transfer duty receipt is obtained before lodging transfer documents at the Deeds Office.

Transfer Duty vs Transfer Fees

The terms transfer duty and transfer fees are often used interchangeably, but they refer to two completely different charges during a property transaction.

Transfer Duty – A Tax Paid to SARS

As explained above, transfer duty is a government tax payable by the buyer when acquiring a property over a certain value. It is collected by SARS and is not negotiable. The amount depends on the value of the property and is calculated using SARS’ sliding scale.

Transfer Fees – Legal Fees Paid to Conveyancing Attorneys

Transfer fees, by contrast, are the professional legal fees charged by the conveyancing attorney appointed to attend to the transfer of ownership. These fees are based on the value of the property, but they are regulated by the Legal Practice Council’s recommended tariff guidelines. They are separate from and in addition to the transfer duty.

For example, a property valued at R2,500,000 will not only attract a SARS transfer duty of R79,275 (per the example above), but will also incur legal transfer fees—usually amounting to tens of thousands of rands, depending on the attorney's tariff.

Other Property Transfer Costs

It’s important to note that these two charges—transfer duty and transfer fees—do not cover the full cost of transferring a property. Buyers should also budget for:

• Deeds Office registration fees
• FICA verification and administrative disbursements
• Postage and petties
• Bond registration fees (if applicable)

A common mistake among first-time buyers is assuming the seller pays these costs or thinking they are included in the purchase price. In reality, these are separate expenses, and failure to budget accurately can lead to delays or financing shortfalls.

Additional Costs Involved in Property Transfers

When purchasing property in South Africa, transfer duty and legal fees are only part of the total expenses involved. Buyers often encounter several ancillary costs that must be settled before the transaction can be completed.

Understanding these in advance helps avoid unpleasant surprises during the conveyancing process.

Conveyancing Attorney Fees

These are the professional fees charged by the appointed conveyancing attorney responsible for transferring the property into the buyer’s name. While not a tax, these fees are mandatory for the legal process and are calculated according to the recommended tariffs issued by the Legal Practice Council. The higher the property value, the higher the transfer fee.

In addition to their base tariff, conveyancers may charge for additional services or disbursements, such as:

• Electronic instruction fees
• Consultation fees (if required)
• Preparing powers of attorney or special resolutions (for entities)

Bond Registration Costs

If the buyer is taking out a mortgage loan, a second legal process takes place in parallel to the transfer—the registration of the bond. This requires a separate set of legal documents and a different attorney appointed by the bank. These bond registration attorneys charge fees that also follow the property value tariff system, along with bank initiation fees and administrative costs.

Even though the buyer usually doesn’t choose the bond attorney, they are still responsible for paying the associated costs.

Deeds Office Fees

The Deeds Office charges a government-mandated registration fee for processing and recording the new ownership in the national property register. This fee is also based on the purchase price and ranges from a few hundred to several thousand rands. A transfer cannot be completed unless the Deeds Office confirms and accepts the lodged documents.

Rates and Levy Clearance Certificates

Before the property can be registered, the seller must provide a clearance certificate confirming that all municipal rates, utilities, or sectional title levies are fully paid. The cost of obtaining these certificates is generally borne by the seller, but in some cases, the buyer may be asked to advance the funds or reimburse them, depending on the agreement.

FICA and Administrative Disbursements

Conveyancing attorneys are obligated to comply with FICA (Financial Intelligence Centre Act) requirements. Verifying identity documents, proof of residence, and source of funds involves administrative procedures that carry a cost—usually passed on to the buyer as part of disbursement charges.

How a Conveyancing Attorney Helps

The role of a conveyancing attorney is both highly technical and legally regulated. In South Africa, only admitted attorneys with the necessary conveyancing qualifications may transfer property on behalf of buyers and sellers. Their responsibilities extend far beyond document processing—they manage every legal, financial, and procedural aspect of a property transfer.

Accurate Transfer Duty Calculation and Payment

Your attorney ensures that transfer duty is calculated according to the correct SARS bracket and based on the proper valuation. They complete the necessary SARS documentation (TD forms), handle submission, and make the payment on your behalf from funds paid into their trust account. If errors occur in this process, it can lead to penalties, interest, or delays in registration.

Ensuring Compliance with the Sale Agreement

Conveyancers review the Offer to Purchase, verify the identities of all parties, and check for compliance with conditions such as bond approvals, special levies, or suspensive clauses. They ensure that deadlines are met and that all parties understand their obligations.

Liaising with Banks, SARS, Municipalities, and the Deeds Office

An experienced attorney acts as a central liaison between all stakeholders:

• Banks (for bond instruction and guarantees)
• SARS (for transfer duty clearance)
• Municipalities or body corporates (for clearance certificates)
• The Deeds Office (for final registration)

This coordination is crucial to ensure that no component of the process holds up the final transfer.

Protecting Your Legal Interests

Should any disputes arise—such as issues with property boundaries, seller misrepresentations, or failure to deliver vacant occupation—the conveyancing attorney is positioned to offer immediate legal advice. They also ensure that the title deed is correctly issued and reflects all necessary endorsements, servitudes, or restrictions.

Providing a Trust-Based Process

All funds—including the purchase price, transfer duty, and fees—are held in the attorney’s trust account until they are lawfully disbursed. This offers the buyer and seller protection under the Attorneys Act and ensures transparent, accountable handling of large financial transactions.

In short, without a qualified conveyancing attorney, the legal transfer of property simply cannot take place. Their role is indispensable in ensuring that both statutory requirements and contractual obligations are fully met.

VDM Attorneys – Conveyancing Attorneys in Sandton

Transfer duty and property transfer costs are governed by strict legal and procedural requirements, and understanding them is essential for any purchaser. VDM Attorneys remains informed on the applicable legislation, SARS regulations, and conveyancing standards that shape property transactions in South Africa. Whether reviewing the tax implications of a purchase or clarifying the distinction between transfer duty and professional fees, VDM Attorneys applies legal insight to property law in a way that supports informed decision-making.

Contact us for more information.