TRANSFER FEES VS TRANSFER DUTY: KNOW THE DIFFERENCE BEFORE YOU BUY
The distinction between transfer fees and transfer duty is one of the most misunderstood aspects of buying property. Although both are costs associated with purchasing property, they serve very different purposes. Transfer fees are the professional fees charged by the conveyancer for transferring ownership of the property, while transfer duty is a tax payable to SARS.
Understanding the difference between these costs can help you budget effectively and avoid unexpected expenses during the transfer process.
ARTICLE SUMMARY
- Transfer fees are paid to the conveyancer, while transfer duty is a tax paid to SARS.
- Both costs are calculated according to the purchase price or value of the property.
- Properties valued at R1 210 000 or less are exempt from transfer duty tax.
- Buyers should also budget for bond registration costs if financing the purchase with a home loan.
- Transfer costs are payable before registration takes place.
WHAT ARE TRANSFER FEES?
Transfer fees are the professional fees charged by the conveyancer for transferring ownership of the property from the seller to the buyer.
These fees cover the legal and administrative work required to successfully register the property into the buyer's name, including:
- Drafting transfer documents.
- Liaising with banks, estate agents, municipalities and SARS.
- Obtaining municipal rates clearance certificates.
- Obtaining levy clearance certificates (where applicable).
- Lodging the transfer documents at the Deeds Office.
- Attending to the registration of transfer at the Deeds Office.
WHAT DO TRANSFER FEES PAY FOR?
Transfer fees cover far more than paperwork. Conveyancers are responsible for ensuring that the transfer complies with South African property and regulatory laws, that all legal requirements are met, and that ownership is properly transferred and registered.
A conveyancer manages the legal risks associated with the transfer and coordinates the various parties involved to ensure a smooth transfer process.
HOW ARE TRANSFER FEES CALCULATED?
Transfer fees are based on the purchase price or value of the property. The higher the purchase price, the higher the transfer fees.
Transfer fees are calculated according to a tariff set by the Legal Practice Council (LPC), using a sliding scale linked to the property's value.
In addition to professional fees, buyers are usually responsible for certain disbursements, which may include:
- Deeds Office fees
- Rates/levy clearance costs
- Lodgement agent fees
- Electronic document generation fees
- Postage and petties
SECTIONAL TITLE AND PROPERTIES WITHIN PRIVATE RESIDENTIAL ESTATES
If you are purchasing a sectional title unit or a property within a private estate, additional costs may apply, including:
- Ordinary levy clearance certificates
- Consent to transfer costs
- Homeowners' Association levy clearances
- Estate administration charges, club joining fees, membership fees
These costs differ between the various estates/sectional title schemes depending on their requirements and procedures.
At Araujo Attorneys, we have extensive experience attending to property transfers in estates in the Durban, Umhlanga and the North Coast areas. Our in-depth knowledge of estate-specific requirements enables us to anticipate any additional costs for buyers and facilitate efficient transfers.
WHEN ARE TRANSFER FEES PAYABLE?
Transfer fees are payable to the conveyancer before registration of the transfer can take place.
In most instances, buyers are required to pay these costs shortly after receiving their pro-forma account from the conveyancer and before the property is registered into their name.
WHAT IS TRANSFER DUTY?
Transfer duty is a tax levied by SARS on certain property transactions and is payable during the transfer process.
Not every property purchase attracts transfer duty. Properties sold by VAT-registered sellers, may be subject to VAT instead of transfer duty.
TRANSFER DUTY EXEMPTION
With effect from 1 April 2025, the first R1 210 000 of the purchase price or value of a property is exempt from transfer duty.
This exemption applies irrespective of the type of property being purchased.
HOW IS TRANSFER DUTY CALCULATED?
Transfer duty is calculated on the purchase price or market value of the property, whichever is higher.
The current transfer duty rates are as follows:
WHEN IS TRANSFER DUTY PAYABLE?
Transfer duty must be paid during the transfer process before SARS will issue the transfer duty receipt required for registration in the Deeds Office.
Transfer duty must be paid within 6 months of date of sale. Late payment may result in penalties and interest being levied by SARS.
WHO APPOINTS THE CONVEYANCER?
In South Africa, it is generally the seller who appoints the conveyancer. Although the seller makes the appointment, it is the buyer who is responsible for paying the transfer costs.
WHAT ABOUT BOND REGISTRATION COSTS?
If you are financing your purchase with a home loan, you will incur a third category of costs known as bond registration costs.
These are separate from transfer fees and transfer duty and relate to the registration of the mortgage bond over the property.
The bond registration attorney is appointed by your bank, and the buyer is responsible for paying these costs to the bond attorney.
CAN TRANSFER COSTS BE INCLUDED IN A HOME LOAN?
Some financial institutions offer 105% home loans, which may assist qualifying buyers in financing the additional costs associated with purchasing property.
While this can reduce the amount of upfront cash required, buyers should bear in mind that it will increase the overall amount financed and may result in higher monthly bond repayments and interest costs.
HOW TO BUDGET FOR PROPERTY TRANSFER COSTS
Property buyers should budget for:
- Transfer fees
- Transfer duty (if applicable)
- Bond registration costs (if applicable)
- Estate and levy clearance costs (if applicable)
- Additional disbursements and administrative charges
Understanding when these costs become payable can help you budget effectively and avoid unexpected expenses during the transfer process.
To estimate your transfer costs, use our Transfer Cost Calculator:
https://www.araujoattorneys.co.za/price-calculator
You can also access our Cost Schedule for more detailed information on transfer fees, transfer duty and bond registration costs:
https://www.araujoattorneys.co.za/resources
CONCLUSION
Purchasing property involves more than simply paying the purchase price. Transfer fees, transfer duty and bond registration costs can significantly impact your budget and should be carefully considered before signing an Offer to Purchase.
Your conveyancer will be able to advise you on which costs are applicable to your transaction and provide a detailed cost estimate before the transfer proceeds. It is always advisable to have a conveyancer explain the fine print and associated costs before committing to a property transaction.
If you are buying or selling property and are unsure of the costs involved, our team at Araujo Attorneys is here to guide you every step of the way.
WHY CHOOSE ARAUJO ATTORNEYS?
- Speedy, accurate and personalised service
- A warm, people-centered approach to client care.
- Extensive experience with property transfers in residential estates and sectional title schemes.
- In-depth knowledge of estate-specific requirements and associated costs.
- Conveniently located offices in Umhlanga, Ballito and the Midlands.
If you would like certainty regarding the allocation of costs, send us your signed Offer to Purchase and we will gladly confirm the applicable fees based on the wording of the agreement.
Disclaimer: This article is provided for informational purposes only and should not be substituted for legal advice on a specific matter. The information contained herein is subject to the law applicable at the time of writing and may change as legislation is amended. We recommend contacting Araujo Attorneys directly for advice relating to your specific matter.
