Foreigners Can Purchase and Own Immovable Property in South Africa with Relatively Few Restraints:
Here are the key legal criteria:
- No General Restrictions: Foreigners, including non-residents, can buy property in South Africa. The only exception is for illegal aliens, who are not permitted to own property.
- Legal Documentation: Foreign buyers must comply with the same legal requirements as South African citizens, including having a valid passport and if applicable, a visa or residence permit.
- Financial Regulations: Foreign buyers can finance their property purchase through South African banks, but they are typically required to bring in at least 50% of the purchase price from abroad.
- Registration: The property must be registered in the Deeds Office and the process is handled by a conveyancer.
- Tax Implications: Foreign buyers are subject to the same tax laws as local buyers, including transfer duty, capital gains tax and property taxes.
When a foreigner sells immovable property in South Africa, there are specific legal requirements and tax implications to consider:
- Withholding Tax: If the property is sold for more than R2 million, the buyer must withhold a portion of the sale price as a provision for Capital Gains Tax (CGT) The rates are:
- 7.5% for individuals
- 10% for companies
- 15% for companies
- Residency Status: The seller’s residency status is determined by the ordinary residence test or the physical presence test. Non-residents are subject to the withholding tax.
- Tax Directive: Sellers can apply for a tax directive from the South African Revenue Service [SARS] to reduce or exempt the withholding tax based on their specific circumstances.
- Repatriation of Funds: Foreign sellers can repatriate the original capital invested plus any profit from the sale, subject to compliance with South African Reserve Bank regulations.
- Capital Gains Tax: Non-residents must pay CGT on the disposal of immovable property in South Africa.
INFO added by: Meryl Muller
Real Estate Partners: October 2024