Selling Property in South Africa To Foreign Buyers ?

Thinking of selling your property in South Africa to overseas buyers? Foreign real estate investors may choose to consider South Africa. Non-resident investors benefit from a favourable exchange rate and a lack of limitations on buying real estate here, making it one of the most accessible investment markets in the world.

 

With so many homes on the market, you need to attract the attention of potential buyers and the best way to accomplish this is with a collection of high-quality photos that show your house in its best light. Your home will receive little attention if you only have a few photos showing it in a messy and cluttered state.

 

New data from Comparethemarket.com.au shows that South Africa ranks 4th in the world’s ten most inexpensive nations for homebuyers. In order to compute the cost per square metre as a proportion of yearly income, the study looked at average property prices per square metre and average household disposable income in each nation.

 

It’s important for overseas vendors to know what to expect:

 

The attorney is appointed by the seller.

It’s the seller’s responsibility to hire an attorney, who is frequently recommended by the real estate agent. To complete the transfer of ownership, a transferring attorney works with both the seller and buyer to ensure that all necessary paperwork is obtained and everything proceeds without hiccups.

This may be a very hard transaction because of all the aspects that must be taken into account,” explains Michelle van Wyk, partner at Bisset Boehmke McBlain, when selling to an overseas buyer.

There can never be enough emphasis placed on the significance of working with a worldwide real estate brand like RE/MAX of Southern Africa, according to Regional Director and CEO Adrian Goslett. Goslett points out that the seller’s selected real estate practitioner and transferring attorney should handle all of the additional issues.

 

Avoid these common blunders.

Van Wyk cites the need that any document signed outside of the United States be witnessed by a Notary Public whose signature may be used to verify the authenticity of the document. A South African Embassy or Consular Office can also be used to sign the paperwork.

 

This can be time-consuming and expensive.

In many cases, it’s preferable for a friend or family member in South Africa to act as a special power of attorney on behalf of the seller or buyer. The seller’s conveyancer is the best choice for individuals who have no connections or relatives in the area.

 

In addition, Van Wyk reminds out that married overseas sellers and purchasers must have their spouses help them in signing the transfer and mortgage bond papers.

 

Acknowledgement of signature

However, it is not uncommon for non-residents to face lengthier transfer times due to the complexities of the transactions and the fact that the conveyancer/s may lack the essential competence to deal with all difficulties in a pro-active way, according to Van Wyk. When this happens, it might take months to get things done.

Goslett stresses the necessity of associating with a global real estate brand whose agents are educated to manage foreign transactions and have ties with conveyancers that specialise in overseas investments in order to prevent unnecessary delays.

It’s not any more difficult to sell to international clients if you work with a real estate professional who has experience in international transactions and can recommend an attorney with the necessary expertise.

 

Taxes on foreign buyers and sellers of property in South Africa

According to Property Fox’s legal counsel, Smith Tabata Buchanan Boyes (STBB), residents of South Africa are liable for Capital Gains Tax (‘CGT’) on the sale of any capital asset, with a few exceptions, STBB says. Non-residents, on the other hand, must pay CGT exclusively on the following items:

They can pay in cash and deposit the entire sum into the Reserve Bank of South Africa.

Any right or interest in real estate that is located in the country of South Africa. If 80% or more of a company’s net assets can be traced back to real estate in South Africa, you have a stake of at least 20% in that company’s assets there. Assets of a non-permanent resident’s presence in South Africa through which commerce is conducted.

The individual’s tax return for the year in which the asset is sold includes information on the capital gain. To avoid paying CGT on a capital gain, a non-resident who sells real estate in a year of assessment and who has not yet registered as a taxpayer in South Africa must first do so and then fill out an income tax return that includes the capital gain computation.

In 2007, our tax code included a provision requiring non-resident merchants to retain back a portion of their sales revenues. SARS must receive a provisional CGT payment from a non-resident who sells a property for greater above R2 million:

  • For a natural non-resident seller, 7.5 percent;
  • For a natural non-resident seller, 7.5 percent;
  • for a foreign business, 10 percent; and
  • for a foreign trust, 15 percent.

The only exception to this rule is if a special CGT directive is applied for prior to the registration of the property.

Currently, estate duty is computed at 20% on the dutiable worth of an estate up to R30 million and 25% on the value above R30 million. However, a surviving spouse’s inheritance is exempt from estate tax.

While South African citizens can claim an R3.5 million reimbursement on their dutiable assets, non-residents can claim a rebate only on assets located in South Africa.

 

Foreigners who want to invest in property in South Africa have a lot of options. Foreign currency rates are advantageous and there are a wide range of possibilities to choose from, from little city flats to sprawling farmland. However, it is important to examine the legal criteria before making a decision.

Compare listings

Compare
Translate »
%d bloggers like this: