Buy­ing a home in South Africa – all the costs

Weekend Argus (Saturday Edition) - - PERSONAL FINANCE -

When you buy a prop­erty, you have to pay a tax known as trans­fer duty. Trans­fer duty is paid on a slid­ing scale – the more ex­pen­sive the prop­erty, the higher the duty, as fol­lows:

If the pur­chase price is R500 000 or less, you pay no trans­fer duty.

If the pur­chase price is be­tween R500 000 and R1 mil­lion, you pay trans­fer duty of five per­cent on the value above R500 000. For ex­am­ple, if you buy a prop­erty for R800 000, you pay trans­fer duty of five per­cent on R300 000 (R800 000 – R500 000).

If the pur­chase price is more than R1 mil­lion, you pay trans­fer duty of R25 000 plus eight per­cent on the value above R1 mil­lion.

You do not have to pay trans­fer duty if you buy prop­erty from a seller who is reg­is­tered as a VAT ven­dor and the sale is part of his or her busi­ness ac­tiv­i­ties – for ex­am­ple, when you buy prop­erty from a de­vel­oper or at an auc­tion. on the pur­chase price, as fol­lows: R300 000 to R500 000: R400 R500 000 to R1 mil­lion: R500 R1 mil­lion to R2 mil­lion: R600 R2 mil­lion to R3 mil­lion: R800 R3 mil­lion to R5 mil­lion: R1 000 More than R5 mil­lion: R1 200 The rec­om­mended fees for con­veyancers to reg­is­ter a bond are as fol­lows, based on the bond amount: Be­low R500 000: up to R5 400 R500 000 to R1 mil­lion: R5 400 + R800 per R100 000 (or part thereof) over R500 000

R1 mil­lion to R5 mil­lion: R9 400 + R400 per R100 000 (or part thereof) over R1 mil­lion

More than R5 mil­lion: R25 400 + R200 per R100 000 or part thereof over R5 mil­lion. The Deeds Of­fice is also re­spon­si­ble for the regis­tra­tion of your mort­gage bond. Levies are based on a slid­ing scale de­pend­ing on the value of the bond to be reg­is­tered, as fol­lows: R300 000 to R500 000: R400 R500 000 to R1 mil­lion: R500 R1 mil­lion to R2 mil­lion: R650 R2 mil­lion to R5 mil­lion: R1 000 More than R5 mil­lion: R2 000. name, the bank is not al­lowed to charge you an ini­ti­a­tion fee if the bank you are switch­ing to ap­proached you first. In other words, if an­other bank ap­proaches you with an of­fer of a more at­trac­tive in­ter­est rate and you agree to switch banks, you should not be charged an ini­ti­a­tion fee. You will, how­ever, be charged for the re-regis­tra­tion of the bond. This sep­a­rate, on­go­ing fee is usu­ally added to your in­stal­ment and should be re­flected as a sep­a­rate line item on your home loan state­ment. This fee is lim­ited to R57 (in­clud­ing VAT) a month. You will also have to pay the con­veyancer the mu­nic­i­pal rates due on the prop­erty. The re­quire­ments dif­fer from one mu­nic­i­pal­ity to the next and most mu­nic­i­pal­i­ties ask for be­tween four and six months rates to be paid up­front but this also de­pends on the time of year when you buy the prop­erty.

In ad­di­tion to pay­ing a pro-rata pro­por­tion of the mu­nic­i­pal rates for the year, you will be charged for a rates clear­ance cer­tifi­cate, show­ing that the rates on the prop­erty are up to date. The cer­tifi­cate costs be­tween R200 and R500.

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