“Hidden” costs when buying or selling property in South Africa
“Hidden” costs when buying or selling property in South Africa:
Who pays for what? Buying or selling a property involves navigating through various costs and expenses, and as a buyer or seller it is very important to know who is liable for the various associated costs, and more importantly to be prepared for all the “hidden” costs that you may be liable for…
BUYERS:
OK, so let’s start with the most common costs and expenses that the Buyer, or Purchaser, will be responsible for: (The conveyancers / transferring attorneys will collect most of these costs from the buyer):
Transfer Duty or VAT: Transfer duty is a tax payable to SARS (South African Revenue Service) according to the current transfer duty tables, which will be based on the amount of the purchase price. The conveyancers will collect the transfer duty and pay it over to SARS. If the seller is VAT registered, and the purchase price includes VAT, then you will NOT pay transfer duty.
Transfer Fees and Deeds Office Fees: These are fees payable to the Transferring Attorneys for their services in facilitating the transfer of property ownership, as well as fees charged by the Deeds Office. These are payable by the Purchaser unless otherwise agreed in the sale agreement.
Bond Registration Fees: These are fees payable to the Bond Attorneys (who are appointed by the bank that grants the Purchaser a loan) for registering the bond against the property (if the buyer is taking out a loan and registering a bond).
Home Owners Association Consent Fee: If there is a Home Owners Association, this fee may be required for obtaining consent from the Home Owners Association for the transfer to take place.
Body Corporate Levy Clearance Fee: If applicable, this fee is payable to the Body Corporate for them to ensure that all levies owed to the Body Corporate are settled and up to date.
Special Levies Imposed by a Body Corporate: If any special levies are payable, the buyer may inherit the balance on a pro rata basis, and will have to pay the balance owing as from the date of transfer.
Costs of Complying with Special Bond Conditions: If there are any special conditions that the bank has imposed on the bond approval, the buyer will usually need to cover the associated costs, unless otherwise agreed. A common example would be if the bank requires a valuation of the property as a condition for bond approval, then the buyer would usually need to cover the cost of this valuation.
Occupational Interest Pending Transfer: In cases where occupation of the property occurs before transfer, the buyer may need to pay occupational interest as agreed between the buyer and seller.
OTHER COSTS: Don’t forget to consider other costs like moving and packing costs, redecorating, landscaping, telephone and internet connections, water and electricity deposits etc.
SELLERS:
OK, so now, let’s shift our focus to SELLERS and the costs they typically bear during a property transaction.”
Agent’s Commission: This is the agreed percentage or amount of the final selling price that is paid to the estate agent for their services.
Certificates of Compliance: Unless otherwise stipulated, Sellers are responsible for obtaining all the necessary certificates of compliance, most of which are required by law, such as an Electrical Compliance Certificate, Electrical Fence Certificate, Gas Compliance certificate, Water By-law certificate in the City Of Cape Town, and if stipulated in the sale agreement also a Beetle Certificate. You will need to pay for the inspections, as well as any repairs that may be required in order to obtain the compliance certificates.
Bond Cancellation Fees: If there is an existing bond on the property, the seller will need to pay fees to the appointed Bond Cancellation Attorneys to get the existing bond cancelled.
Penalty Interest: If a bond needs to be cancelled, the seller may incur penalty interest if the bank was not given sufficient notice about the bond cancellation (they usually require 90 days’ notice).
Advanced Rates Clearance Figures: These are payments made to the relevant municipality to clear any outstanding rates on the property, and to make provision for the upcoming rates until transfer takes place.
Levies Payable Up to Date of Transfer: Sellers are responsible for settling all levies payable to the Home Owners Association and/or Body Corporate up to the date of transfer.
Special Levies Imposed by a Body Corporate: If there are any Additional or Special levies payable, the seller may need to pay these levies up until the date of transfer, depending on the payment terms.
Capital Gains Tax: If applicable, sellers may need to pay capital gains tax on the profit made from the sale of the property. There are certain rebates, such as for a person’s primary residence… We have a separate video on our FAQ page on our website explaining Capital Gains Tax in more detail.
Home Owners Association Consent: If required, sellers will need to obtain consent from the Home Owners Association.
So… In summary, understanding these costs is essential to ensure a smooth and transparent transaction, AND also to ensure that property buyers and sellers are not caught off guard by any unexpected expenses.
Please note: the above information is supplied in good faith, but you should always consult with a tax expert or conveyancing attorney before making any decisions.
Please contact us if you have any questions or need guidance on selling or buying property. We specialize in making the process as smooth as possible.
We look forward to hearing from you…
Email: info@PropLA.co.za
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