The costs of selling property in South Africa are significant. Estimate these expenses before the decision about selling your property is finalised so you know how much will be left over in your bank account after you sell.
These are the major costs of selling property:
- the estate agent’s commission for selling the property. The fee is usually 5 – 8% of the property selling price, plus VAT. If you are selling property privately then there would be no estate agent’s commission but you would have upfront marketing costs. At Steeple, with our low fixed commission model, we charge far less!
- costs for electrical, beetle (if you have a coastal property), electric fencing (if relevant), gas (if relevant) and plumbing (if in Cape Town) compliance certificates. These certificates each cost R500 and up, but if problems are discovered then you also have to pay for the necessary work to be done before the certificate can be issued.
- bond cancellation fees (R3000 or more). This is charged when you cancel your bond after selling your property. There can also be an early settlement fee if you cancel within 2 years of taking out the bond.
- bond notice period penalty interest. If you are intending selling property and cancelling the bond then you should let your bank know in advance, in writing (and continue notifying the bank every 3 months until your property is sold). Otherwise the bank may decide to charge you a fee for cancelling your bond early. This fee is calculated as 3 months’ interest, which can be a substantial sum to pay unnecessarily. Please note that if you give notice about cancelling your bond, the bank will freeze your facility and you won’t be able to access it.
- upfront contribution towards municipal rates and taxes, services and levies (if applicable), often equivalent to about 4 months’ payments, to get rates and taxes and levy clearance certificates. This can be a large amount. If your property transfers earlier than anticipated you might get a refund.
- capital gains tax if you sell your property at a profit (the first R2 000 000 of the profit made on the sale of a “primary residence” is not taxed if the house is registered in the name of a natural person).
- costs of moving your furniture and possessions to a new property or to storage.
Most of these costs of selling property are only payable when the property is transferred into the new buyer’s name while others (like the upfront payments for the clearance certificates) are always payable before transfer.
If you want to learn more, try our Detailed Guide to Property Selling Costs in South Africa.