In terms of Section 35 A of the Income Tax Act 58/1962, with effect from 1 September 2007, Non-residents disposing of immovable property in South Africa are subject to a withholding tax of 7.5% (10% if it is a company or CC and 15% if it is a Trust) of the total purchase price, where the amount payable in aggregate exceeds the sum of Two Million Rand (R2 million).
If we could proof to the Revenue Service that the tax on your capital gain will be less than 7.5% of proceeds then they will issue a tax directive for a lower amount.
In practise this means that before registration of transfer takes place, you could approach the South African Revenue Services for a directive regarding the amount tax payable if any (Capital Gains Tax). After receiving the tax directive the attorneys could remit to you the 7.5% which was withheld or the balance thereof (after paying the tax payable).
I could gather the necessary information to assist you in calculating your SA capital gain and draft the Section 35A application to the South African Revenue Services in getting a Tax Directive for a lower(or maybe Rnil directive).
Information that I'll need from your client is:
- when did you buy the property(please give the month and year)?
- for how much did you buy it, also give me the original transfer fees and legal fees (and bond fees) that you have paid)? Please give me proof of the initial costs
- how much is the estate agent's commission on selling?
- how much is the selling price ?
- how much did you spend on improvements on this property over the years(for example on new garden, additional tiling, extra rooms (not repairs), alarm system (re beams), anything put in garden ?
- is property sold with curtains, blinds – how much was it costing?
- is the property only registered in his/her name?
- we can’t deduct repairs, except if it was done with the view to sell and to get a higher selling price.
- do the seller/sellers have a tax number in SA? If yes, please send to me. If not send me a copy of the seller passport page with his/her photo, as well as their residential and postal address and their telephone numbers.
If I can’t do better than the 7.5% , then I charge nothing and I do not apply for a Directive.
Please do not hesitate to contact me should you have any further queries.
Kind regards
Signature Fanus Jonck