CGT on a property sale, with the primary-residence or annual exclusion and 40% inclusion.
Capital gains tax
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Capital gain
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Included in income
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Your breakdown
Updates live as you type
Item
Amount
Worked example
Take a buy-to-let flat sold for R3,500,000 with a base cost of R2,000,000, owned by someone under 65 with R600,000 of other taxable income. The gain is R3,500,000 less R2,000,000, which is R1,500,000. Because this is not a primary residence, the R2,000,000 primary-residence exclusion does not apply; only the R40,000 annual exclusion does, leaving R1,460,000. Forty percent of that, R584,000, is included in taxable income. Adding it to the R600,000 income pushes part of the gain into higher brackets, and the extra tax it creates is about R232,092. That is roughly 15.5 percent of the gain, below the 18 percent ceiling because not all of the included amount is taxed at the top marginal rate. A primary home would instead get the R2,000,000 exclusion first, which often wipes the gain out entirely.
Step
Amount
Gain (sale less base cost)
R1,500,000
Less annual exclusion
minus R40,000
Included at 40%
R584,000
Capital gains tax
R232,092
How it is calculated
South Africa has no separate capital gains tax rate. Instead a portion of the net gain is added to your taxable income and taxed at your marginal rate. The calculator first works out the gain as sale price less base cost, where base cost includes the purchase price plus acquisition and improvement costs. If the property was your primary residence it removes the R2,000,000 primary-residence exclusion, then it removes the R40,000 annual exclusion. Forty percent of what remains, the individual inclusion rate, is added to your other income. The CGT is the difference between your tax with that amount included and your tax without it, which captures the way the gain is taxed across whichever brackets it falls into. The top effective rate for an individual is about 18 percent, being the 45 percent top marginal rate times the 40 percent inclusion.
Frequently asked questions
How is capital gains tax on property calculated in South Africa?
There is no separate CGT rate. You work out the gain (sale price less base cost, which includes the purchase price and improvement costs), apply the primary-residence exclusion of R2,000,000 if it was your main home, then the annual exclusion of R40,000. Forty percent of the remaining gain is included in your taxable income and taxed at your marginal rate, so the top effective rate is about 18%.
What costs can be included in the base cost of a property?
The base cost includes the original purchase price, transfer duty and legal fees paid when acquiring the property, the cost of capital improvements made during ownership, and selling costs such as estate agent commissions and legal fees on disposal. Day-to-day maintenance and repairs do not qualify. A higher base cost reduces the gain and therefore the CGT payable, so keeping good records of improvement expenditure matters.
What is the primary-residence exclusion and who qualifies?
The primary-residence exclusion of R2,000,000 applies when the property was your main home for the period you owned it. A property that was rented out for part of the ownership period may only qualify for a proportional exclusion based on the number of years it was your primary residence. Second homes, buy-to-let properties, and vacant land do not qualify and only benefit from the R40,000 annual exclusion.
How does selling a property affect your income tax bracket for the year?
The 40% inclusion amount is added to your other taxable income in the year of disposal. If that pushes you into a higher income tax bracket, the CGT is effectively taxed at a higher marginal rate than your base salary alone would attract. This calculator models that correctly by computing the tax on total income including the gain, then subtracting the tax on income without it, so the result reflects your actual bracket for that year.