Buying property in South Africa as a foreigner

Yes. There is no restriction on non-residents owning property in South Africa. The Reserve Bank’s exchange control rules allow non-residents to invest freely, provided the purchase is at arm’s length, at a fair market price, and paid for in an approved way.

Owning property does not give you the right to live in South Africa. Residence is a separate application.

The money normally comes in from abroad through an Authorised Dealer, which is a South African bank licensed to deal in foreign exchange. Rand from a non-resident rand account in your own name also qualifies.

Keep the bank’s record of the foreign funds coming in and being converted. Conveyancers call it the deal receipt, and keeping it with the bank’s payment confirmation is what lets you send the sale proceeds abroad later.

A local home loan for a non-resident may not exceed the rand value of the money brought in from abroad: a one-to-one ratio. In practice that means borrowing up to about half of the price, with the rest, plus transfer duty and costs, coming from abroad.

The loan must be secured by a rand deposit or another rand asset of equal or higher value, and banks may lend less under their own criteria. Non-residents who live and work in South Africa can borrow on normal lending terms.

Foreign buyers pay transfer duty on exactly the same table as South Africans: nothing up to R1,210,000, rising to 13% of the value above R13,310,000. A R10,000,000 home carries R877,356 in transfer duty.

When you buy a new home from a developer registered for VAT, VAT is included in the price instead and no transfer duty is due. Conveyancing fees, bond registration and deeds office fees come on top and vary by attorney.

When a non-resident sells South African property for more than R2,000,000, the buyer must withhold part of the price and pay it to SARS: 7.5% for an individual seller, 10% for a company and 15% for a trust. It is withheld on the full price, not just the amount above R2,000,000.

The withholding is an advance against the tax due on your gain, not a final tax, and SARS can issue a directive to reduce it. Once the tax is settled, the proceeds of a property owned by a non-resident can be transferred abroad.