If you are deciding to sell your property these tips will come in handy:
Capital gains tax on a secondary property
Each individual is granted R 40 000 capital gains exemption per year. Selling a secondary property for a profit attracts this R 40 000 exemption. On top of this only 40% of the capital gain is added to the taxable income. Therefore the maximum capital gains tax that an individual could have to pay on a secondary property is 18% of the profit amount. This is still lower than the income tax charged on normal income.
Taxable income for individuals
2021 tax year (1 March 2020 - 28 February 2021)
Income Tax Calculator:
https://www.oldmutual.co.za/personal/tools-and-calculators/income-tax-calculator
Taxable income (R)
Rates of tax (R)
1 - 205 900
18% of taxable income
205 901 - 321 600
37 062 + 26% of taxable income above 205 900
321 601 - 445 100
67 144 + 31% of taxable income above 321 600
445 101 - 584 200
105 429 + 36% of taxable income above 445 100
584 201 - 744 800
155 505 + 39% of taxable income above 584 200
744 801 - 1 577 300
218 139 + 41% of taxable income above 744 800
1 577 301 and above
559 464 + 45% of taxable income above 1 577 300
Calculating capital gains on a secondary property
You have sold your investment property and your capital gain was R 1 100 000 and CGT is applicable. The capital gain inclusion rate is 40% (this means only 40% of the profit is included in the personal taxable income). We also assume that your personal income for the year was R 500 000.
Capital Gain: R 1 100 000
Less Annual Exclusion: R 40 000
Total Gain: R 1 060 000
Inclusion rate of 40% of R 1 060 000: R 424 000
Taxable income: R 500 000
Total taxable income: R 924 000
Tax payable on the income of R 500 000 before CGT: R 125 193
Tax payable after CGT R 291 611
Total CGT R 166418
CGT = 15,12% of profit
Below is a link to SARS giving a detailed expatiation on CGT