The transfer duty exemption for properties under R600,000 remained largely untouched over the last few years, however, given a slow but steady recovery in the property market the Minister announced an increase in the exemption to R750,000, with effect from 1 March 2015. The relief at the lower end has however resulted in a transfer duty increase at the higher end for properties exceeding R2.25 million. Transfer duty in the aforementioned bracket will, with effect from 1 March 2015, be R85,000 plus 11% of the value above R2.25 million.
The relief is targeted at the middle income market but one feels that more could have been put on the table. Given the median growth in house prices in South Africa, an exemption of R1 million may have been more beneficial, however, considering the Minister’s small room to manoeuvre, the R150,000 increase this year could be followed by a further increase in the exemption in the next Budget cycle, depending on the performance of the property market.