Capital Gains Tax on Selling Your House in South Africa

Selling your main home rarely produces a capital gains tax bill, because the primary residence exclusion is large and it applies to the gain, not the sale price. For a disposal in the 2027 year of assessment (on or after 1 March 2026) the first R3,000,000 of the capital gain on your primary residence is disregarded. You pay CGT only on the gain above that, and even then only 40% of it is taxed. A second property gets no exclusion, so the arithmetic there is quite different.

The number that matters is the gain, not the price you sell for. Get that right and the rest follows.

What the gain actually is

Your capital gain is the selling price less your base cost, not the selling price on its own. Base cost includes what you paid for the house, the cost of improvements (not repairs), and the costs of buying and selling it, such as transfer duty, conveyancing fees and the estate agent's commission. Only the growth over that base cost is a gain, and only part of that gain is ever taxed.

The primary residence exclusion

If the home is your primary residence, you disregard the first slice of the gain:

• R3,000,000 for a disposal in the 2027 year of assessment (on or after 1 March 2026).
• R2,000,000 for a disposal in the 2026 year of assessment or earlier.

Three conditions apply. The exclusion covers a maximum of two hectares of land used with the home for domestic purposes; a bigger property or a part used for business must be apportioned. You must ordinarily reside in the home and use it mainly for domestic purposes, and the exclusion does not cover periods when you did not live there. And you can only have one primary residence at a time.

Which year of assessment you fall into is fixed by when the sale becomes unconditional, meaning the date the agreement is concluded and any suspensive conditions are met, not the date you move out or the money clears.

The annual exclusion and the inclusion rate

After the primary residence exclusion, the annual capital gains exclusion applies to what is left: R50,000 for the 2027 year of assessment (R40,000 for 2026). Then 40% of the remaining gain is included in your taxable income and taxed at your marginal rate. Because the top marginal rate is 45%, the maximum effective CGT rate for an individual is 18%.

What happens if the gain is under the exclusion

Andiswa sells the house she has lived in for years. She sells for R4,500,000. She originally paid R1,200,000, spent R300,000 building on a room and a garage over the years, and pays R150,000 in agent commission and legal costs on the sale. Her base cost is:

R1,200,000 + R300,000 + R150,000 = R1,650,000.

Her capital gain is:

R4,500,000 − R1,650,000 = R2,850,000.

For a 2027 disposal the primary residence exclusion is R3,000,000. Her gain of R2,850,000 is below that, so the whole gain is disregarded. She pays no capital gains tax, even though she sold for R4,500,000. The price was never the tax base; the R2,850,000 gain was, and the exclusion swallowed it.

What happens if the gain is over the exclusion

Now take a larger gain of R3,800,000 on a primary residence, disposed of in the 2027 year of assessment, for a seller whose other income puts them at the 45% marginal rate.

Start with the primary residence exclusion:

R3,800,000 − R3,000,000 = R800,000.

Apply the annual exclusion:

R800,000 − R50,000 = R750,000.

Include 40% in taxable income:

R750,000 × 40% = R300,000.

Tax that at the 45% marginal rate:

R300,000 × 45% = R135,000.

So on a R3,800,000 gain the CGT is R135,000, which is the 18% maximum effective rate applied to the R750,000 that remained after both exclusions. A second home or a buy-to-let would get no R3,000,000 exclusion at all, so the taxable slice, and the bill, would be far larger on the same gain.

To run your own figures, the capital gains tax calculator applies the exclusions and inclusion rate to a specific gain, and the guide on tax on selling property or shares covers the wider disposal rules. If you let the property, see tax on Airbnb income; for other assets, tax on cryptocurrency works through the same CGT machinery.