Guide for Non-Residents Buying Property in South Africa
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Non-Residents can feel comfortable when investing in South African property as the property market for overseas buyers are well regulated in South Africa. No significant restrictions apply to non-resident property buyers in South Africa and the overseas buyer can enter the South African property market with confidence.
Buy Property in Own Name or Through Legal Holding Entity
A non-resident buying property in South Africa has the option of buying the property in their own name or through a legal holding entity such as a trust or company structure. Some non-residents prefer buying property through a legal holding entity for taxation, management and asset protection reasons. You should consider, through consultation with a lawyer or property expert, which option will suit your individual circumstances the best.
South African Property Ownership Methods
Share block, freehold, leasehold or sectional title are the methods of property ownership in South Africa that non-residents can choose from. Most non-resident property buyers choose the leasehold method of property ownership as this method of transfer is much more flexible than the other methods.
South African Exchange Control Regulations
Generally overseas property buyers who retain their non-resident status can remit and repatriate funds freely overseas, this includes capital gains made after the deduction of taxes due. Once an individual becomes a resident in South Africa he/she may only remit and repatriate funds for a period of five years before he/she falls under the exchange control restrictions imposed on South African residents.
South African Property Contracts and Documentation
When a suitable property has been found and a price has been agreed upon, either an 'offer to purchase' or a 'deed of sale' can be signed. Both documents are legally binding and it is advisable to consult legal advice before signing either of the documents. In fact it is a good option to have the services of a lawyer to assist throughout the entire conveyance and purchase process to check any contracts and to carry out title and land registry searches and checks.
Transfer and Registration of Property
The transfer and registration of property is usually handled by the seller's conveyance lawyer. The seller will give the lawyers power of attorney to handle the process of registering the property at the Deeds Office in the name of the non-resident buyer.
South African Property Taxes, Fees and Charges
When property is purchased in South Africa transfer duty is levied by the government; the duty is charged at a variable rate of between 1 and 8% for private property ownership or 10% for a property purchased via a legal entity. Other fees involved in buying a property in South Africa include transfer costs of between 1 and 2%, mortgage costs, lawyer’s fees and estate agents fees which are normally included in the purchase price.
