Tax on Selling Property or Shares in South Africa

The fast answer: when you sell an asset at a profit in South Africa you don't pay a separate "sale tax" – you pay capital gains tax (CGT), and CGT isn't a flat percentage of your profit either. SARS works out your gain, subtracts the exclusions you're entitled to, includes only 40% of what's left in your taxable income, and taxes that slice at your normal marginal rate. For an individual the most you can ever pay is an effective 18% on the gain. If you're selling the home you live in, the first R2,000,000 of the gain is usually excluded entirely, so most homeowners pay nothing. Shares and second properties don't get that R2m shield, but they still get the R40,000 annual exclusion and the same 40% inclusion mechanism.

This guide covers all three of the disposals South Africans ask about most – your primary home, a second or investment property, and shares – and shows the workings so you can see exactly how the number is built.

CGT isn't a tax on the sale price – it's a tax on the gain, run through your income tax

The single most common misunderstanding is that CGT is a percentage of what you sell for. It isn't. CGT applies only to your capital gain, and even then only a fraction of that gain is taxed. It flows through your ordinary income tax in four steps, no matter what you're selling:

Work out the capital gain. Proceeds (what you sell for) minus your base cost (broadly, what you paid, plus qualifying acquisition costs and improvements, plus selling costs like agent's commission).
Subtract the exclusions you qualify for. For a primary residence, the R2,000,000 primary residence exclusion comes off first. Then the R40,000 annual exclusion (available to every individual, on any asset) comes off what remains.
Apply the 40% inclusion rate. For individuals, only 40% of the net gain is "included" in taxable income.
Tax that included amount at your marginal rate. The included portion is added to your other income for the year and taxed at whatever bracket it pushes you into.

Because the top marginal rate for individuals is 45%, the maximum effective CGT rate is 18% (40% × 45%). Most people pay less, because their marginal rate is below 45%. Someone on a 26% marginal rate, for example, has an effective CGT rate of about 10.4% (40% × 26%).

The other date that matters is the date of disposal – usually when the sale agreement becomes unconditional, not the day the money lands. That date fixes which year of assessment the gain falls in.

All figures in this guide are for the 2026 year of assessment (1 March 2025 – 28 February 2026), the one you file in Filing Season 2026. The Budget 2026 increases (primary residence exclusion → R3,000,000; annual exclusion → R50,000) apply to disposals on or after 1 March 2026 – the 2027 year of assessment – and do not apply to a 2026 disposal.

Selling your home: the R2 million primary residence exclusion

A primary residence is a home mainly used for domestic or residential purposes by a natural person (or special trust) who ordinarily resides there – the house or flat you actually live in, not an investment property.

For that home, SARS excludes the first R2,000,000 of the capital gain (or loss) from CGT entirely. The exclusion applies to the gain, not the selling price. A home that sells for R4 million but was bought for R3 million has a R1 million gain, which sits comfortably inside the exclusion – no CGT.

Because the exclusion is so large, most ordinary home sales fall entirely within it and produce no CGT at all. You only start paying when the gain climbs above R2,000,000.

A few situations narrow the shield:

The gain exceeds R2,000,000. Only the portion above R2m is exposed to CGT (and the R40,000 annual exclusion then comes off that).
More than 2 hectares of land. The exclusion covers up to 2 hectares used with the residence. Gain attributable to land beyond that is apportioned and may be taxable.
Part of the home used for business. If you run a business from a dedicated, claimed portion of the house, that portion is apportioned out and doesn't enjoy the exclusion.
Periods when it wasn't your primary residence. If you let it out or were absent beyond the limited periods SARS permits, the gain is apportioned for the time it didn't qualify.

Apportionment is the recurring theme: SARS splits the gain between the qualifying part and the non-qualifying part, and only the qualifying part gets the full exclusion.

Selling a second property: annual exclusion only, no R2m shield

A holiday house, a buy-to-let flat or any property you don't ordinarily live in is not a primary residence. It does not get the R2,000,000 exclusion. It does still get the R40,000 annual exclusion and the 40% inclusion rate.

That difference is large. On a R1,000,000 gain:

As a primary residence, the R2m exclusion wipes it out entirely. CGT: R0.
As a second property, only the R40,000 annual exclusion applies. R1,000,000 − R40,000 = R960,000; × 40% = R384,000 included in income; taxed at your marginal rate.

Your base cost matters most here. Keep records of the purchase price, transfer duty and conveyancing fees, the cost of any improvements (a new roof, an extension – not routine repairs), and the agent's commission on sale. Every rand of legitimate base cost reduces the gain.

Selling shares: capital gain or trading income?

Shares have an extra question to answer first: is your profit capital (taxed under CGT) or revenue (taxed as ordinary income at your full marginal rate, with no inclusion-rate discount and no annual exclusion)?

The distinction turns on your intention. Shares held as a long-term investment produce capital gains. Shares bought and sold actively as a trading business produce revenue income, taxed in full like a salary.

South African law settles much of this with a bright-line rule:

Section 9C – the three-year rule. If you've held equity shares for at least three years, the proceeds are deemed to be of a capital nature on disposal. So a long-held share portfolio is taxed under CGT – gain, less the R40,000 annual exclusion, 40% inclusion, marginal rate – regardless of your original intention. (Listed equity shares benefit most clearly from this certainty.)
Held under three years. The capital-versus-revenue test applies on the facts. A genuine investor who happens to sell early can still be capital; a frequent trader is likely revenue.

Where the gain is capital, shares are taxed exactly like a second property: no R2m exclusion, but the R40,000 annual exclusion and 40% inclusion rate both apply. The annual exclusion is a single R40,000 across all your capital gains for the year combined – your shares and any property gain share the same R40,000, not one each.

A capital loss on shares isn't wasted: it's set off against your other capital gains for the year, and any unused balance carries forward to future years.

The annual exclusion and how everything stacks

Every individual gets an annual exclusion – the first R40,000 of net capital gain (or loss) for the 2026 year of assessment is disregarded. It applies to all your capital gains for the year combined, not per asset.

The two exclusions stack only on your home. On a primary residence you subtract the R2,000,000 primary residence exclusion first, then the R40,000 annual exclusion comes off whatever is left. On a second property or a share portfolio, only the R40,000 is available – and it's shared across every disposal in the year.

Worked example: a home, a second flat and a share sale in the same year

Thandi has three disposals in the 2026 year of assessment.

1. Her primary home. She bought it for R2,200,000 and sells it for R5,400,000. It was her primary residence throughout.

Capital gain: R5,400,000 − R2,200,000 = R3,200,000
Less primary residence exclusion (R2,000,000): R3,200,000 − R2,000,000 = R1,200,000

2. A second flat she'd rented out. She bought it for R900,000 and sells it for R1,250,000.

Capital gain: R1,250,000 − R900,000 = R350,000 (no primary residence exclusion)

3. A share portfolio held more than three years (so capital under section 9C). Base cost R200,000, sold for R250,000.

Capital gain: R250,000 − R200,000 = R50,000

Now SARS combines them and applies the single annual exclusion once:

Total gains after the primary residence exclusion: R1,200,000 + R350,000 + R50,000 = R1,600,000
Less the R40,000 annual exclusion: R1,600,000 − R40,000 = R1,560,000 net capital gain
Apply the 40% inclusion rate: R1,560,000 × 40% = R624,000 added to taxable income
Taxed at her marginal rate. If Thandi's marginal rate is 41%, the CGT cost is roughly R624,000 × 41% = R255,840.

Notice the R40,000 annual exclusion was used once, not three times – and the R2m exclusion applied only to the home. That's the whole shape of CGT in one example.

Frequently asked questions

Do I pay tax when I sell my house in South Africa? Usually not. The first R2,000,000 of the gain on your primary residence is excluded, and most ordinary home sales fall entirely within that. You only pay CGT on the gain above R2m, and even then only 40% of it is included in your taxable income.

Is CGT a separate 18% tax? No. 18% is the maximum effective rate for individuals, not a flat rate. SARS includes 40% of your net gain in your taxable income and taxes it at your marginal rate. Since the top marginal rate is 45%, 40% × 45% = 18% is the ceiling. Most people pay less.

How is selling a second property taxed differently from my home? A second or investment property gets the R40,000 annual exclusion but not the R2,000,000 primary residence exclusion. So a gain that would be tax-free on your home can attract real CGT on a second property – only the first R40,000 is shielded before the 40% inclusion applies.

How are profits on shares taxed – capital gains or income? It depends on intention. Long-term investment shares produce capital gains. Active trading produces ordinary income, taxed in full. Section 9C settles it for equity shares held at least three years: those are deemed capital in nature, so they're taxed under CGT (R40,000 annual exclusion, 40% inclusion, marginal rate).

Can I use the R40,000 annual exclusion on each asset I sell? No. The R40,000 annual exclusion is a single amount that applies to your total net capital gain for the year across all assets combined – your home, a second property and your shares all share the same R40,000.

Does the exclusion apply to the sale price or the gain? The gain. CGT is calculated on proceeds minus base cost – not the price you sell for. A R6 million sale on a home bought for R4.5 million is a R1.5 million gain, fully inside the primary residence exclusion.

Estimate your CGT

Want to see whether your sale falls inside an exclusion, or how much CGT you'd actually pay on the gain above it? Our Capital Gains Tax calculator walks through the gain, both exclusions, the 40% inclusion rate and your marginal rate – and shows the reasoning at every step, not just the final number. For a full picture across all your income, including reliefs like medical tax credits, use the Comprehensive calculator in your workspace. Not sure a sale even obliges you to file? See Do I need to submit a tax return?

SARS sources: