Small relief for homebuyers

Transfer duties trimmed, especially for cheaper houses

Those planning to buy a house this year will welcome the National Treasury’s

10% upward adjustment to transfer duty brackets, which were last amended in 2020.

The upshot of the measures announced in the budget is that the transfer duty exemption threshold will be lifted from R1m to R1.1m. The knock-on effect of the adjustment means most buyers will save on transfer duty from March 1, albeit to a larger extent at the lower end of the market.

For instance, a homebuyer purchasing a house priced at R1.5m will pay

R6,750, or 36%, less in transfer duty, while the saving on a R3m purchase comes to R18,400, or

12.6%. On a R12m home, buyers will pay R38,400, or 3.3%, less.

Industry players have in recent months called on the government to provide some relief to homebuyers, who have been hit by

375 basis point hikes in interest rates since

November 2021.

The general view was that the Treasury could afford to lower transfer duty, given the surge in tax revenues from property sales over the past two years. Transfer duty collections reached a record R10.57bn in the 2021/2022 tax year — a 39% year-on-year increase.

That is well ahead of the previous high, R8.25bn in 2016/2017 — the last housing upturn. Despite rising interest rates, transfer duty on property sales continued to test new highs last year, reaching a revised estimate of R11.73bn, 11% up on the previous tax year.

Seeff Property Group chair Samuel Seeff welcomes the increase in the transfer duty threshold, but says he would have liked bigger tax cuts for high-end buyers. “In the price bands above R5m, an increase in sales volumes can generate significantly more income for the economy and fiscus,” he says.