The Capital Gains Tax exclusion for primary residences has increased from R2 million to R3 million. This change raises the tax-free portion of the capital gain realized on the sale of a primary residence by R1 million.
Sellers can save R180,000 if they fall under the top marginal capital gains tax rate of 18%. This new R3 million threshold applies at the time of the property’s disposal.
However, if a sale was concluded before the effective date, only R2 million is exempt from tax. The timing of disposal is determined by when the sale agreement becomes unconditional.
If a sale agreement was concluded before 1 March 2026, the previous R2 million exclusion applies. But if it was concluded on or after this date, sellers benefit from the higher R3 million exclusion.
Robyn Kymdell stated, “If your sale was concluded before the effective date, you only get R2 million exempt on a primary residency sale.” She added, “However, where tax law recognizes the sale after the effective date, you get R1 million more tax-exempt income.”
Estate agents and accountants should not expect changes in promulgated laws regarding this matter. The specific drafting of an agreement can influence when a disposal is regarded as having occurred for tax purposes.
The change took effect as specified by the finance minister. Sellers who sealed their sales before 1 March 2026 may lose out on this increased exclusion.
The timing of disposal is not determined by when the transfer is registered or when the purchase price is paid or received. Kymdell emphasized this point: “The specific drafting of an agreement can influence when a disposal is regarded as having occurred for tax purposes.”
Details remain unconfirmed on how many sellers will be affected by these changes. The implications for future property transactions are still unfolding.
