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I’M BUYING A HALF-SHARE IN THE PROPERTY – IS TRANSFER DUTY STILL APPLICABLE?

Oct 25, 2021

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We all know that transfer duty is payable on the acquisition of immovable property where the value exceeds R1 million, and where the transaction is not subject to VAT. But what about a situation where only a half share is being acquired, at a purchase price of less than R1m?

Transfer duty is a tax paid to the South African Revenue Services and is calculated on a tiered basis, as follows :

We are often approached by clients who are purchasing a half-share (or other fraction) in a property, and have picked up a common misconception regarding transfer duty in these types of acquisitions: in this situation, transfer duty is not calculated on the purchase price for the share, but on the fair value of the property, and then calculated by expressing this as the fraction that the purchaser is acquiring.

By way of example, if a purchaser has agreed to purchase a half-share in a property valued at R1 900 000 for R950 000, transfer duty will be calculated on R1 900 000 and divided by two for the half-share purchase. So the fact that the purchase price is less than R1 000 000 does not exempt the purchaser from transfer duty in this instance. Transfer duty on R1 900 000 is R42 750, so the purchaser will be obliged to pay R21 375 as transfer duty in this example.

Remember that transfer duty is not payable when you inherit a property (or share in a property) and take transfer as a consequence. Transfer duty is also not payable when transfer is passed in terms of a Divorce Order.

If you would like to learn more about transfer duty, or have questions, feel free to get in touch with one of our property attorneys to assist you.

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