Costs and Taxes when Purchasing a Home
Category Buyers
When buying property there are certain costs involved that need to be considered, as well as the possibility of taxes that need to be paid. Buyers may not always be aware of these costs that they could be charged or taxes that may become payable. This is a very important part of the service that your chosen well-educated professional REDZetc estate agent should prepare you for. This discussion is meant to be as comprehensive as possible in a limited space, but if you need clarification, please feel free to consult with Pam Snyman, the principal of REDZetc at pams@redzproperties.co.za or 082 8000867 / 021 881 3311.
PURCHASING COSTS AND TAXES are the costs that the purchaser can expect to pay before transfer of the property can take place. Please note that the costs as described do not all apply to every single purchase, but may apply depending on the particulars of the particular purchase, i.e. property type/mortgage bond to be registered/contract terms, etc.
Transfer Duty or VAT will, however, apply to each and every purchase.
- Transfer Duty or VAT: Transfer duty is payable on each property purchased for more than R900 000 if the sale was not subject to VAT. If VAT was included in the selling price, there is no Transfer Duty payable by the buyer as VAT is already included in the purchase price in the event that the seller is a VAT vendor. Transfer Duty is levied on a sliding scale that is available from any of our REDZetc agents.
- Rates Clearance Certificate: The local municipality must issue a certificate proving that all R&T's have been fully paid up by the seller.
- Levies or HOA clearance certificates must be issued by the HOA or Body Corporate of a property situated in a community scheme. The levies usually need to be paid upfront for a period of 3-12 months.
- Transfer Costs: These costs are charged by the conveyancer for services rendered, Posts and Petties, Deeds Office Fees and Transfer Duty and starts at R25 790 for a R1 000 000 property and R1 012 535 for a R10m property
- Bond Registration Fees are charged by the attorney who has been appointed by the bank to register a mortgage bond against the title deed of the property on date of transfer and starts at R22 790 for a R1 000 000 property and R 80 000 for a R10m loan
- Bank admin fee: This is charged in the event that the purchaser requires a mortgage loan. R5 985 is the maximum amount payable
- Municipal provision for Rates and Taxes: Some municipalities require an upfront payment by the seller for a number of months after registration and would be repayable to the seller by the purchaser
- Occupational Rental: Should the purchaser and seller have agreed that the purchaser may take occupation of the property before date of transfer, they must agree on a monthly pro rata amount to be paid by the buyer.
So you see, buying property is not for sissies. But the answer is to be prepared for all eventualities...certain and uncertain. Professional estate agents at REDZetc worth their salt are in a position to assist you to plan your financing effectively without any unpleasant surprises along the way!
Pam Snyman CPRE (NQF Level 7)
(MPhil, Dip Advanced Property Practice, Dip Property Investment & Valuation)
Author: REDZetc
