Capital Gains Tax for Non-Residents Selling SA Property

"Can I repatriate sale proceeds from SA property?" My name is Nathan Fumal, CEO of KILICASA, and in this article I cover repatriation, tax and compliance for non-resident sellers.

Why this matters: selling South African property as a foreigner

Non-resident sellers face a two-pronged reality: South Africa taxes immovable property located in the country, and exchange-control and banking procedures affect how and when sale proceeds can leave the Republic. Understanding SARS rules, withholding requirements and double tax relief is essential to avoid surprises, cash-flow problems and delayed transfers.

Overview: the tax and regulatory landscape

When a non-resident disposes of immovable property in South Africa, three main legal areas intersect:

Income tax and capital gains tax (CGT) liability to SARS.
Withholding obligations imposed on the purchaser or conveyancer (SARS withholding under s35A of the Income Tax Act).
Banking and exchange control steps required by an authorised dealer (your bank) to repatriate proceeds.

Capital gains tax (CGT): what non-residents need to know

South African tax law treats gains from immovable property located in South Africa as taxable in South Africa, even when the seller is a non-resident. Practically, this means:

The disposal is included in your SA tax computation and could create a liability for CGT.
Individuals: the annual inclusion rate for capital gains is 40% (that portion is added to taxable income and taxed at the seller's marginal rate). Companies and trusts have different inclusion rates (80% for companies, variable for trusts).
Non-residents must register with SARS (if not already registered) to file an income tax return for the year of disposal.

Example CGT calculation

Example: You bought a flat in Cape Town in 2010 for R 1,800,000 (~USD 95,000) and sell in 2026 for R 3,600,000 (~USD 195,000). For simplicity assume no improvements or allowable costs beyond acquisition and selling costs.

Capital gain = R 1,800,000 (~USD 97,500).
Included in taxable income (individual inclusion 40%) = R 720,000 (~USD 39,000).
If your marginal tax rate in SA is 31% the tax on the inclusion = R 223,200 (~USD 12,100).

Note: actual CGT can change with primary residence exclusions (if applicable), allowable costs, exchange rate adjustments for residents, and any relief under a double tax agreement (DTA).

Withholding tax on property sales: section 35A explained

Section 35A of the Income Tax Act aims to secure tax on immovable property disposals by non-residents. Key points:

The purchaser (or person making payment to the non-resident) may be required to withhold an amount and pay it over to SARS.
The default withholding is calculated as a percentage of the purchase price — currently the statutory mechanism requires the purchaser to withhold 7.5% of the purchase price unless a SARS directive specifies otherwise (including nil withholding) or a lower withholding amount is issued.
Withholding is a provisional collection measure, not necessarily the final tax amount. The withheld amount will be credited against the seller’s final tax liability when the seller files their return.

Practical consequences: purchasers and conveyancers are cautious. Buyers often ask the seller to produce a SARS directive before transfer to avoid impounding funds or unnecessary withholding.

How to avoid excessive withholding

Obtain a SARS directive prior to transfer. The seller — typically through the conveyancer or tax advisor — applies to SARS for a directive that specifies the withholding amount (possibly nil). SARS will consider prior payments, estimated tax liability and compliance history when issuing a directive.

Double Tax Agreements (DTAs): relief and credit mechanisms

DTAs that South Africa has with other countries generally allocate taxing rights for immovable property to the source country — in this case South Africa. That means SA has primary taxing rights over capital gains from immovable property located in SA.

However, DTAs typically include:

Credit or exemption mechanisms so you don’t end up taxed twice — e.g., your country of tax residence may give you a foreign tax credit for tax paid in South Africa.
Rules about residency certification and documentation required to claim relief.

Action: before sale, consult a tax adviser in your residence country to confirm how your home country will tax the gain and what documentation (tax residency certificate, tax paid in SA) is required to claim credits.

SARS compliance steps for foreigners (practical checklist)

Non-resident sellers should complete these steps to ensure compliance and smooth repatriation:

Register for a South African tax number with SARS (if you do not already have one).
Provide FICA (proof of identity and address) to the conveyancer and bank — passport, proof of foreign address, and contact details.
Apply for a SARS directive under s35A via your conveyancer to determine withholding requirements before transfer and to minimise holdbacks.
Keep evidence of acquisition cost, improvements and selling costs to reduce the taxable capital gain.
File the required income tax return in the year of disposal and pay any outstanding CGT or income tax due.
Obtain a tax compliance status and receipts from SARS confirming payment so banks and authorised dealers can process repatriation.

Repatriation through authorised dealers: banks and exchange control

South African banks (authorised dealers in foreign exchange) manage outflows of capital. Procedures typically include:

Submission of the conveyancer’s settlement statement showing net proceeds and proof that SARS withholding (if any) has been handled, or that a SARS directive permits repatriation.
Proof of identity, FICA, tax number and a SARS payment reference or tax clearance.
Bank compliance checks for anti-money laundering (POPIA and FICA) and foreign exchange reporting.

Although South Africa relaxed many exchange controls since the early 2000s, banks still require documentary proof to move substantial sums offshore. Expect timelines of a few business days once documents are in order, but allow longer if SARS needs to issue refunds or confirm directives.

Common pitfalls and how to avoid them

Be aware of these frequent issues that delay repatriation and increase cost:

Not applying for a SARS directive early — purchasers will withhold 7.5% by default, potentially tying up funds.
Poor record-keeping — inability to prove base cost and allowable deductions raises CGT and increases net tax payable.
Not registering for a South African tax number before transfer — creates processing delays with SARS and banks.
Ignoring DTA implications — you may end up with double provisional withholding or miss out on credits at home.

Scenario: a step-by-step sale and repatriation timeline

Example timeline for a non-resident selling a townhouse in Durban:

Pre-listing: engage conveyancer and tax advisor; gather acquisition and improvement invoices; start SARS tax number registration if necessary.
Offer accepted: buyer requests proof of SARS directive; seller applies for directive via conveyancer to minimise withholding.
Transfer process: conveyancer lodges transfer documents; purchaser withholds per directive or the default 7.5% until directive arrives.
Transfer registered: purchaser/conveyancer pays withheld amounts to SARS; seller receives net proceeds into South African bank account.
Tax return: seller files SA tax return for year of disposal, calculates final CGT liability; any shortfall must be paid to SARS; overpayments are refundable.
Repatriation: once SARS confirms tax position and the bank has required documents, authorised dealer processes outward payment to seller’s overseas account.

Documentation checklist for smooth repatriation

Passport and certified ID documents (FICA).
Conveyancer settlement statement and proof of transfer registration.
SARS directive under s35A or receipt of withheld tax payment.
Proof of payment of any outstanding tax (SARS receipts).
Local bank account details and overseas beneficiary account details (SWIFT/BIC/IBAN).
Tax residency certificate from your home country if claiming DTA relief.

When to appoint professionals

Because the rules engage tax, conveyancing and banking, assemble a team early:

Conveyancer: manages title, transfer documents and liaises with purchasers and banks.
South African tax advisor: prepares the SARS directive application and final tax returns.
Authorised dealer (bank) relationship manager: prepares repatriation paperwork and compliance screening.
Foreign tax advisor: confirms DTAs, foreign tax credits and reporting obligations in your tax residence.

Actionable tips and key strategies

Apply for a SARS directive before signing transfer documents — it prevents automatic 7.5% withholding.
Keep meticulous acquisition and improvement records — reducing the taxable gain lowers overall taxes withheld.
Get a South African tax number early; SARS processing can take time if you start at transfer stage.
Use a single conveyancer who communicates directly with the purchaser, bank and SARS to reduce delays.
Obtain a tax residency certificate from your home country to accelerate DTA relief and foreign tax credits.

How KILICASA helps foreign sellers

At KILICASA we simplify the administrative complexity that stalls many cross-border property transactions. Our portal connects sellers to experienced conveyancers, tax advisors and authorised dealers, and we provide documentation checklists and local market guidance so you can plan transfer and repatriation timelines with confidence. KILICASA’s network helps match you with professionals who understand SARS directives, s35A procedures and the practicalities of repatriation for non-residents.

Conclusion

Selling property in South Africa as a non-resident is fully workable but requires early planning. Key steps are: register for a SARS tax number, apply for a s35A directive before transfer, keep accurate cost records to minimise CGT, and work closely with a conveyancer and your bank to meet FICA and exchange-control requirements. Don’t treat the 7.5% withholding as the final tax — it’s a provisional safeguard for SARS that is reconciled after you file your return. With the right professionals and documentation, repatriating your proceeds can be efficient and predictable.

KILICASA, because everyone deserves a place.

Frequently Asked Questions

Do non-residents always pay CGT in South Africa?

Yes — capital gains on immovable property located in South Africa are taxable in South Africa. The final amount depends on allowable costs and your inclusion rate; DTAs may provide foreign tax credits in your country of residence.

What is the 7.5% withholding and can I avoid it?

The 7.5% is the default withholding under s35A applied to non-resident sellers. You can apply for a SARS directive before transfer to reduce or eliminate withholding, subject to SARS assessment.

How long does repatriation take after transfer?

Once SARS directives and bank compliance (FICA) are in order, repatriation typically takes a few business days. Delays arise when SARS requires additional documentation or when tax liabilities are still being reconciled.

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