Navigating Property Purchase in South Africa: Foreigners' Guide
Can foreigners buy property in SA? This article outlines the necessary documentation, financing options, tax considerations, and key points to remember.
People often ask whether foreigners are permitted to purchase immovable property in South Africa.
The answer is, Yes, foreigners, from all over the world, can purchase property in SA, including Agricultural land, provided certain documentation is presented and compliant during the purchase and/or registration of the transfer processes.
Essential Documentation generally required would be:
1. Valid passport
2. Valid Visa or Permanent Residence Permit
3. FICA documentation – e.g. proof of identity, proof of residence, marital and tax status
Can Foreigners obtain loan finance in SA?
Yes, foreigners can obtain mortgage loans in SA provided they comply with certain lending criteria as imposed by SA Financial Institutions and the SA Reserve Bank, such as:
1. Valid Visa
2. Temporary or Permanent Residence permit
3. Foreign National Declaration
4. Proof of income
5. Payment of 50% of the purchase price
6. SA Reserve Bank requirements that may apply
What taxes potentially apply when the foreigners purchase or sell their SA properties:
As Purchaser:
1. Transfer duty – Transfer Duty Act 40 of 1949 as amended
2. VAT if Vatable transaction – Value Added Tax Act 89 of 1991 as amended
As Seller:
3. Withholding Tax - Sec 35A of the Income Tax Act 58 of 1962 as amended
4. Capital Gains Tax – Income Tax Act
5. VAT if Vatable transaction
Important To Take Note Of:
1. Foreigners often purchase property being married in terms of the laws of their foreign country. When purchasing the property in cash, a spouse does not need to sign documentation but when the property is bonded or when the property is sold the spouse must consent / assist to the bond registration and be a party to the transfer, meaning that the spouse must sign the required documentation prior to registration.
2. Notarially signed and/or certified documents for use in SA and the rest of the world may be required.
3. Foreigners must sign a last will and testament dealing with their SA property and assets.
4. Foreigners must register their Companies or Trusts with the South African Government Agencies being the Companies and Intellectual Property Commission (CIPC) or the relevant Master of the High Court respectively.
5. Foreigners must be aware and advised that all transfer and bond registrations related to a property is only legal once registration takes place at the relevant Registrar of Deeds having jurisdiction.
It is crucial to approach knowledgeable and experienced Property Practitioners and Attorneys, Conveyancers and Notaries, such as Snymans Inc when selling and purchasing properties in South Africa.
Written by: Sophia de Klerk
Moderated and approved by: Clive Smith
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