When buying a home, property transfer costs are a part of the process that simply cannot be avoided and often catch first time buyers off-guard and unprepared financially. Therefore, it’s important for all home buyers to be aware of the transfer costs that come with purchasing a home.
There are a number of individual expenses that make up the total transfer costs to be paid to the transferring attorneys. These must be paid before the date of the bond registration.
Transfer duty is a tax levied on a property’s value above R900 000 and is specifically for the process of having the property transferred into the buyer’s name. Transfer duty is generally the largest portion of the total property transfer costs and is not payable on properties valued at less than R900 000.
All persons, including closed corporations, companies and trusts are required to pay transfer duty. As of March 2017, the transfer duty threshold was raised from R750 000 to R900 000.
For a home valued at R1.5 million, the buyer will pay approximately R51 000 in transfer fees; R25 000 for transfer duty, approximately around R20 000 for attorney’s fees and R5 000 in admin and VAT fees.
No transfer duty is payable if the seller is registered as a VAT vendor; this is the case when buying property in a new development where the developer is generally VAT registered. The developer as the seller would have to include VAT in their purchase price.
Conveyancing costs are payable to the transferring attorneys in order to get the new home transferred from the seller to the buyer before registering it in the buyer’s name. There is no standard cost for conveyancing as it varies according to the law firm’s fees as well as the property value.
However, as a guideline, buyers should expect to pay approximately R20 000 on conveyancing fees for a property worth R1.5 million.
Transfer Post, Petties, FICA and other fees serve cover small expenses like posting documents to other parties, including the buyer. This cost varies between different law firms but is usually a fixed fee of approximately R1000.
The Property Transfer Deeds Office Registry Fee is another government cost payable to the Deeds Office which is facilitated by the Transferring Attorneys.
This cost is for the Title Deed and legal transfer and registration of the home or property into the buyer’s name. It’s a fixed amount and depends on the purchase price of the property.
The buyer pays bond costs to the bond registration attorneys before the date of property registration. This amount is less than the accumulative transfer costs for the home which include Bond Registration.
For more information about property transfer costs or if you would like to know more about our conveyancing services, please contact us.
We also have a handy bond and transfer costs calculator to assist you.
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