Do I pay tax when I inherit a house in South Africa?

No income tax and no capital gains tax fall on you when you inherit. An inheritance is a capital receipt, and the capital gains tax triggered by the death is settled inside the deceased estate. Your own tax only arises later, if and when you sell the property.

What is my base cost on an inherited property?

The market value of the property on the date the person died, which is the value used for the estate's deemed disposal and shown in the liquidation and distribution account. You are taxed only on the growth in value after that date, plus you can add the cost of later improvements.

Do I get the R2,000,000 primary residence exclusion on an inherited house?

Only if you actually live in it as your main home and use it mainly for private purposes. If you inherit a house and rent it out or leave it empty, you do not get the primary residence exclusion; you get only the R40,000 annual exclusion for the 2026 tax year.

How is the capital gain taxed when I sell?

Take the selling price, subtract selling costs and your date-of-death base cost to get the gain. Subtract the R40,000 annual exclusion (2026 tax year), include 40% of the balance in your taxable income, and pay tax on it at your marginal rate, up to an effective 18%.

- https://www.sars.gov.za/tax-rates/income-tax/capital-gains-tax-cgt/ - https://www.sars.gov.za/types-of-tax/capital-gains-tax/ - https://www.sars.gov.za/wp-content/uploads/Ops/Guides/Legal-Pub-Guide-CGT02-ABC-Guide-on-CGT-for-Individuals.pdf - https://www.sars.gov.za/types-of-tax/estate-duty/

Capital Gains Tax on Inherited Property in South Africa

You pay no tax when you inherit a property, but you may pay capital gains tax when you later sell it. Your base cost is the market value of the property on the date the person died, so you are taxed only on the growth from that date to the date you sell, not on the whole value you received. For the 2026 tax year the first R40,000 of your total capital gains is excluded, and 40% of what remains is added to your taxable income and taxed at your marginal rate.

So there are two separate moments. Inheriting the house does nothing to your tax. Selling it later is your own capital gains tax event, and the base cost you inherit is what keeps the tax reasonable.

Inheriting the property is not taxed in your hands

An inheritance is a capital receipt, not income, so it does not go on your income-tax return and it does not push you into a higher bracket. The capital gains tax linked to death is settled inside the deceased estate: the person who died is treated as having disposed of their assets at market value on the day they died, and the estate accounts for any gain up to that point. By the time the property reaches you, that reckoning is done. The broader position is set out in is inheritance taxed in South Africa.

Your base cost is the date-of-death value

When you eventually sell, you work out your own capital gain as proceeds less base cost. Your base cost is the market value of the property on the date of death, the same value used for the estate's deemed disposal, which you will find in the liquidation and distribution account for the estate. To that base cost you can add money you later spend improving the property, and from the proceeds you can subtract selling costs such as the agent's commission. The effect is that you are taxed only on the increase in value after you inherited, not on value that built up during the deceased's lifetime.

When you sell: the numbers for 2026

On a sale in the 2026 tax year, an individual gets the R40,000 annual exclusion, includes 40% of the remaining gain in taxable income, and pays tax on that at their marginal rate. The maximum effective rate on a capital gain is 18%.

There is a valuable extra exclusion, but only if you actually live in the inherited home. The primary residence exclusion takes the first R2,000,000 of the gain out of the calculation, and it applies only where you ordinarily reside in the property and use it mainly for private purposes. Inherit a house and move into it, and up to R2,000,000 of the eventual gain is excluded. Inherit it and rent it out or leave it standing empty, and you get only the R40,000 annual exclusion.

Selling an inherited house: the numbers

You inherit a house with a market value of R1,800,000 on the date of death. You never live in it; you let it out, then sell it in the 2026 tax year for R2,300,000, paying R90,000 in agent's commission.

Proceeds after selling costs: R2,300,000 - R90,000 = R2,210,000.

Capital gain: R2,210,000 - R1,800,000 = R410,000.

Less the annual exclusion: R410,000 - R40,000 = R370,000.

Include 40%: R370,000 x 40% = R148,000. That R148,000 is added to your taxable income. If your other income puts that amount in the 36% bracket, the tax on it is R148,000 x 36% = R53,280, an effective rate of about 13% on the R410,000 gain.

Now the contrast. If you had moved into the house and made it your primary residence, the first R2,000,000 of the gain would be excluded. A R410,000 gain sits well inside that, so the capital gains tax would be R0. You can run your own figures in the capital gains tax calculator and read the guide to tax on selling property or shares, and see the resident's own-home rules in capital gains tax on your house.

Keep the date-of-death valuation

Because your base cost is the date-of-death market value, that figure is worth protecting. Keep the liquidation and distribution account and any valuation obtained for the estate, along with records of improvements you make afterwards. Without proof of the date-of-death value, you may struggle to support your base cost when you sell, which inflates the taxable gain.

From 1 March 2026 (the 2027 tax year) the annual exclusion rises to R50,000 and the primary residence exclusion to R3,000,000, so a disposal on or after that date uses the higher figures. Match the exclusion to the tax year in which you sell.