Demand-ranked tax questions · Individual · Question 19 of 20
How does capital gains tax work when I sell property?
CGT is calculated on the capital gain, broadly proceeds less allowable base cost, not on the full selling price. For 2026/27 SARS lists a R3 million primary-residence exclusion and a R50,000 annual exclusion for individuals. Only part of a gain is included in taxable income, but the result depends on use, ownership and dates.
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The points that decide the answer
- The disposal generally occurs when the sale agreement is concluded, not when transfer is registered.
- Base cost can include acquisition costs and qualifying improvements, but not costs already deducted from income.
- Letting part of the property or using it for trade can reduce the primary-residence exclusion.
- A property held by a company or ordinary trust does not receive an individual's primary-residence treatment.
A practical way to handle it
- Build the acquisition and improvement cost file.
- Establish periods of residence, rental and business use.
- Calculate proceeds, selling costs and apportioned gain.
- Declare the disposal in the correct tax year.
Common mistakes
- Using municipal value as base cost without grounds
- Losing renovation invoices
- Assuming every home sale is fully exempt
What to keep on file
Purchase and sale agreements, transfer statements, improvement invoices, rental history and floor-area calculations.
Source and scope
Based on current SARS guidance, reviewed on 28 August 2026. This is general information, not tax advice. Rates, thresholds and outcomes depend on the tax year and your facts. Regulated submissions and advice are handled through registered partners where required.
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