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Additional Costs Involved In Purchasing A Property …
Purchasers should be aware of various additional costs, over and above the purchase price, which are outlined below.
TRANSFER COSTS
Transfer Duty
This is a government tax levied on property transactions, paid by the purchaser upon transfer of the property into his name, calculated as follows: 0% on the first R500 000 of the purchase price, 5% on the amount over R500 000 up to R1 000 000, and 8% on the portion of the purchase price that exceeds R1 000 000. (A property valued at R2 000 000 will attract transfer duty of R105 000)
Where the purchaser is a company, close corporation or trust, 8% is payable on the full amount.
VAT
This is a government tax levied on property transactions, paid by the purchaser upon transfer of the property into his name, calculated as follows: 0% on the first R500 000 of the purchase price, 5% on the amount over R500 000 up to R1 000 000, and 8% on the portion of the purchase price that exceeds R1 000 000. (A property valued at R2 000 000 will attract transfer duty of R105 000)
Where the purchaser is a company, close corporation or trust, 8% is payable on the full amount.
VAT
A rate of 14% VAT is payable on purchases directly from developers or vendors registered for VAT, provided such property transactions are part of the sellers’ business activities. (Purchasers will pay either VAT or transfer duty, not both)
Conveyancing fees
Calculated on a sliding scale: R6 000 for the first R500 000 plus R800 per R100 000 or part thereof above that, up to R1 000 000 whereafter the fee shall be R400 per R100 000 or part thereof, up to and including R5 000 000 whereafter the fee shall be R200 per R100 000.
Conveyancing fees
Calculated on a sliding scale: R6 000 for the first R500 000 plus R800 per R100 000 or part thereof above that, up to R1 000 000 whereafter the fee shall be R400 per R100 000 or part thereof, up to and including R5 000 000 whereafter the fee shall be R200 per R100 000.
Deeds Office levy
Properties between R500 001 and R1 000 000 will attract a fee of R400
Between R 1 000 001 and R 2 000 000 - fee of R 500
Between R 2 000 001 and R 3 000 000 - fee of R 650
Between R 3 000 001 and R 5 000 000 - fee of R 800
Municipal Rates
Rates due to the local authority has to be paid in full for the financial year. The seller is liable for rates for the part of the year during which they occupy the property, the buyer is responsible for the remainder.
Rates Clearance Certificate
Rates Clearance Certificate
The buyer will also be charged for a municipal rates clearance certificate which is about R30.00 but may vary from region to region.
Body Corporate - Levy clearance
Body Corporate - Levy clearance
Purchasers of sectional title units have to get a clearance certificate from the body corporate confirming that the seller is up to date with levies. The fee for this amounts to approx. R250.
BOND REGISTRATION COSTS
Additional costs apply for purchases financed through a mortgage bond.
Conveyancing fees
In respect of bond registration fees, based on the amount of the mortgage bond.
R4 000 for the first R500 000 plus R600 per R100 000 or part thereof above that, up to R1 000 000 whereafter the fee shall be R300 per R100 000 or part thereof, up to and including R5 000 000 whereafter the fee shall be R150 per R100 000. Add about R300 for postage and petties.
Deeds Office Levy
R4 000 for the first R500 000 plus R600 per R100 000 or part thereof above that, up to R1 000 000 whereafter the fee shall be R300 per R100 000 or part thereof, up to and including R5 000 000 whereafter the fee shall be R150 per R100 000. Add about R300 for postage and petties.
Deeds Office Levy
Between R 500 001 and R 1 000 000 - fee of R 400
Between R 1 000 001 and R 2 000 000 - fee of R 500
Between R 2 000 001 and R 3 000 000 - fee of R 650
Between R 3 000 001 and R 5 000 000 - fee of R 800
For bonds over R 5 000 000 - fee of R 1 000
Deed of Suretyship fee
Between R 1 000 001 and R 2 000 000 - fee of R 500
Between R 2 000 001 and R 3 000 000 - fee of R 650
Between R 3 000 001 and R 5 000 000 - fee of R 800
For bonds over R 5 000 000 - fee of R 1 000
Deed of Suretyship fee
The bank granting the mortgage bond may require suretyship. Banks charge in the region of R200 to have a suretyship deed drawn up.
BANK CHARGES
Interim Interest
When the bond is registered, the bank releases the loan amount and charges interest from that day until the day on which the first installment is due. This amount can be added to the loan amount or may be settled immediately after the loan amount is released.
Bond Initiation Fee
Bond Initiation Fee
Banks may charge a once of fee ranging from R200 to R1 250 to cover administration costs.
Administration Fee
Administration Fee
Banks normally charge a monthly admin fee of approx. R26.00 on bonds over R500 000, reflected on statements as a separate item.
Valuation Fee
Valuation Fee
Commonly known as an inspection or assessment fee to cover the costs of a bank-appointed property assessor who determines whether the property has sufficient value in relation to the loan amount applied for. The fee is between R1 000 and R3 000.
Sectional Title Insurance Certificate
Sectional Title Insurance Certificate
Banks may require a certificate showing that the unit you are purchasing is covered by a valid insurance policy. The policy is issued to the body corporate. Insurance companies charge in the region of R150 to issue a sectional title insurance certificate.
Home Owner’s Insurance
Home Owner’s Insurance
This cover relates to the structure of the property, and covers fire, water damage and other unforeseen events. Banks normally insist on homeowners’ insurance before loans are approved. This premium is normally included in the monthly levies of sectional title properties.
Life Insurance (Bond Cover)
Life Insurance (Bond Cover)
Banks may insist on adequate life insurance to cover the value of the home loan in the event of the owner’s death. The bank may provide this service or you may apply for this from a preferred provider.
These estimates and examples are given for information purposes only and should not be depended on for any specific transaction. Attorney fees are based on recommended tariffs from the Law Society and may vary. Duties and fees may change from time to time. Professional advice should be sought in all instances for individual transactions.
E & OE
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