Many fail to consider ALL the costs involved when entering into a property transaction – Don’t be taken by surprise!

The costs involved in a property transaction aside from the actual price of property are often overlooked. These costs are significant from the perspective of both the buyer and the seller. It is important to take these costs into account before getting involved in the purchase or sale of a property so that you have a realistic idea of what you will be in for.

These are the major costs of selling a property (costs incurred by the seller):

  1. Real estate agent’s commissionReal estate agents usually charge a commission rate of between 5% and 8% of the property sale price, excluding VAT of 14%. By selling through No Agent, you will save thousands of Rands compared to using a traditional estate agent.
    An estate agent charging 8% on a sale price of R2 million, will cost R182 400 including VAT
  2. Compliance certificates
    You will need the following compliance certificates before you can sell your property:

    • Electrical
    • Beetle (if a coastal property)
    • Electric fencing (if applicable)
    • Gas (if applicable)A Johannesburg inspection company quoted the following: Electrical – R800, Beetle – R600, Electric fencing – R850 and Gas – R750. Then, you will also have to pay for the work that has to be done to fix any problems that may be discovered through these compliance checks.
  3. Bond cancellation
    When a property is sold and the property has a bond registered over it, the seller must cancel this bond on the transfer of the property. The cancellation of an existing bond must comply with certain legislation as well as the relevant financial institutions’ procedures and it is therefore mandatory that this procedure is handled by a conveyancing attorney, in this case acting as the bond cancellation attorney.Conveyancing describes the legal procedure whereby lawful ownership of immovable/fixed property is changed (i.e. ownership is “conveyed” from the existing owner to the purchaser).
    The bond cancellation attorney is usually appointed by the financial institution which holds the bond on the property. The seller is responsible for the fee charged by the attorney, which usually ranges between R1 700 and R2 800.
  1. Early bond cancellation penalty
    If you intend to sell your property and cancel the bond, then it is important to notify your bank in writing at least 3 months before the cancellation of the bond. It is therefore important to do this as early as possible, ideally even before the property is put on the market and continue notifying the bank every 3 months until your property is sold. If notice is not given to the bank, then you may be charged a penalty fee for cancelling your bond early. The penalty fee is calculated as 3 months’ interest on the value of the bond, which can be a substantial sum to pay unnecessarily. Do keep in mind that if you give notice about cancelling your bond, the bank will freeze your facility and you won’t be able to access it.
    This is a vital step of the property sales process that the seller needs to be aware of to avoid incurring costs unnecessarily.
  1. Capital Gains Tax (CGT)
    CGT is charged on the profit made from the sale of a property. However, CGT will not apply to most property sales since the first R2 000 000 of the profit made on the sale of a “primary residence” is excluded from tax. This exemption obviously doesn’t apply to the sale of holiday homes or investment property, where CGT is applied to profit from the word go. The maximum effective CGT rate works out to approximately 13.3%.Let’s assume you sell your holiday home (therefore, not a primary residence) for R2 million, there is a R200 000 capital gain and an effective tax rate of 13.3%. You will be liable to pay R26 600 in capital gains tax.
  1. Furniture removalWhen it comes to moving furniture and possessions it is important to get quotes from a couple furniture removal companies and understand the level of service each offers, as this can vary from one company to the next. It is also advisable to ensure that your possessions are insured during the move.
    The actual fee will vary greatly depending on the distance and volume of the removal.
  1. Rates and taxes/levy clearance certificates
    You will usually be required to obtain rates and taxes and levy clearance certificates which entail upfront contributions equivalent to about 4 months’ payments. If your property transfers earlier than anticipated, you may apply for a refund.This is an advanced payment rather than an outright expense, but nevertheless, it is worth mentioning so that you are not taken by surprise.Below is a practical example of what your costs will look like on a R2 million property taking the above expenses into account. This is excluding the bond cancellation penalty, furniture removal and rates and taxes/ levy clearance certificates due to their variable nature.
1 Estate agent commission @ 8%  R 182,000
2 Compliance  R 2,900
Electrical  R 850
  Beetle  R 600
  Electric fencing  R 700
  Gas  R 750
3 Attorney Fee for Bond Cancellation  R 2,500
4 Capital Gains Tax  R 26,600
GRAND TOTAL  R 214,000

These are the major costs involved when buying a property (costs incurred by the buyer):

  1. Deposit
    As a buyer, to qualify for finance, you will generally need to provide a deposit of between 10% and 30% of the purchase price.The deposit amount will be stated in the offer to purchase agreement between the buyer and the seller.The money will accrue interest in your favour while kept in an attorney trust account until the property is transferred into your name.
  1. Bond registration costs
    These are fees which are applicable if you require a bond to finance your property purchase. The two main costs here are the initiation fee payable to the bank and legal fees payable to the bond registration attorney.The initiation fee varies from one bank to the next. You can expect to pay R5000, plus VAT which is R5700 in total.The legal fees are payable to the bond registration attorney who is involved in the bond registration process. They are appointed by the bank and the fee is calculated according to the value of the bond (not the purchase price). They request the draft deed and draft the bond documents.For a bond of R1.5 million the attorney’s fees will be approximately R10 000.
  1. Transfer duty
    The South African Government levies a tax on property transactions called transfer duty. Transfer duty is payable by the buyer when the property is transferred into a buyer’s name.Transfer duty is not charged on homes under R600 000. For properties costing between R600 000 and R1 000 000, the rate of transfer duty is 3%. Properties costing more than R1 million are subject to a rate of R12 000 plus 5% on the value between R1 million and R1.5 million. For properties over R1.5 million, the duty will be R37 000 plus 8% of the amount above that figure.Therefore, the transfer duty on a R2 million purchase would be R77 000.

See below the transfer duty tax table:

Transfer duty is payable at the following rates on transactions which are not subject to VAT-
Value of property (R) Rate
0 – 600 000 0%
600 001 – 1 000 000 3% of the value above R600 000
1 000 001 – 1 500 000 R12 000 + 5% of the value above 1 000 000
1 500 001 and above R37 000 + 8% of the value exceeding R1 500 000


  1. Conveyancing
    It is the conveyancer’s role to change the ownership of the property from the seller to the buyer in accordance with the Deed of Sale.Although the purchaser pays the conveyancer’s fee, it is usually the seller who appoints the attorney. This ensures that the conveyancer acts in the seller’s interest and prevents unnecessary delays in the transfer process.Conveyancing Fees are prescribed by the Law Society of South Africa and is calculated on a sliding scale based on the purchase price of the property.Calculation method where the sale price is more than R500 000:

    R8 250 for the first R500 000 plus R1 100 per R100 000 or part thereof above that, thereafter, up to and including R1 000 000 where after the recommended fee be R550 per R100 000 or part thereof up to and including R5 000 000 where after the recommended fee be R275 per R100 000.

Therefore, expect to pay a conveyancing fee of R19 250 on a R2 million property. ie. R8250 + (110 x 5) + (550 x 10)

  1. Deeds Office registration fees
    The Deeds Office will complete all that is required to register the bond in the buyer’s name. The fee for transferring a property is calculated on a sliding scale based on the purchase price of the property.The fee is currently R900 on a R2 million property. Deeds Office registration is the final step in the process and takes approximately 15 days.

Below is a practical example of what your costs will look like on the purchase of a R2 million property with a R500 000 deposit, taking the above expenses into account.

Sale price  R 2,000,000
Bond  R 1,500,000
                1 Deposit  R 500,000
                2 Bond registration  R 15,700
Initiation fee  R 5,700
  Bond attorney  R 10,000
                3 Transfer duty  R 77,000
                4 Conveyancing  R 19,250
                5 Deeds office  R 900
GRAND TOTAL  R 612,850