Property Tax Guide 2026 — South Africa

1. Rental Income Tax

All rental income you receive from letting out residential property in South Africa must be declared to the South African Revenue Service (SARS) as part of your taxable income. SARS includes income from letting rooms, holiday accommodation or long-term rentals in your gross taxable income.

• Rental income is added to other taxable income (like salary) and taxed at your marginal rate.
• Only permissible expenses directly related to earning rental income can be deducted. These may include municipal rates and taxes, bond interest (interest portion only), insurance, agent fees, repairs and property management costs.
• Expenses that are capital in nature or not incurred in producing rental income (e.g., improvements or personal costs) cannot be deducted against rental income.

2. Transfer Duty on Property Purchases

Transfer duty is payable by the purchaser when buying property above a threshold value. For the 2025/26 tax year (1 April 2025 – 31 March 2026), the tax thresholds and rates are:

• Up to R1,210,000 — 0% transfer duty
• R1,210,001 to R1,663,800 — 3% on the value above R1,210,000
• R1,663,801 to R2,329,300 — R13,614 + 6% on excess
• R2,329,301 to R2,994,800 — R53,544 + 8% on excess
• R2,994,801 to R13,310,000 — R106,784 + 11% on excess
• Above R13,310,000 — R1,241,456 + 13% on excess

3. Capital Gains Tax (CGT)

If you sell an investment property at a profit, you may be liable for Capital Gains Tax (CGT). The gain is calculated as the difference between the selling price and the base cost (purchase price plus allowable costs).

For individuals, 40% of the capital gain is included in taxable income and taxed at your marginal rate (which can be up to 45%). If the property is your primary residence, the first R2 million of the gain is exempt from CGT.

4. Compliance & SARS Obligations

All rental income — including periodic rent, lease premiums and other related amounts — must be declared to SARS through your annual tax return (ITR12). SARS actively uses data matching to identify undeclared income.

Provisional Tax

Landlords earning rental profits may need to register for provisional tax and make interim payments during the tax year if your income is not fully subject to PAYE. This helps spread your tax liability and avoids penalties.

Recordkeeping

Keep detailed records of all rental income, expenses, lease agreements, municipal rates, and related receipts for a minimum of five years. Proper documentation ensures smoother SARS audits and reduces risk of disallowed claims.