When You Don't Pay Transfer Duty: The Exemptions

One of the most valuable — and most frequently relevant — exemptions works through the transfer duty sliding scale itself. The first R750,000 of any property's value is charged at zero percent. This means that if your property is valued at or below this threshold, no transfer duty whatsoever is due.

This isn't a special application or a formal exemption certificate for most buyers — it's simply how the rate table works. For properties above R750,000, duty kicks in progressively on the portion that exceeds the threshold.

Practically speaking, this has an important planning implication: if a seller owns multiple properties and sells them under a single agreement at a combined price, the entire combined value is assessed together. However, by structuring the sale so that each property is covered by its own individual agreement, each purchase price can fall below the threshold independently — lawfully saving the buyer a considerable amount.

South African law has a firm rule: a property transaction cannot be subject to both VAT and transfer duty simultaneously. When VAT is applicable to a sale, the Transfer Duty Act contains an express exemption that removes the obligation to pay transfer duty — regardless of whether VAT is charged at the standard rate or at zero percent.

This exemption comes into play when the seller is a VAT vendor (that is, registered for VAT under the Value Added Tax Act) and the property is being sold as part of, or in connection with, their VAT enterprise. The most common examples are developers selling newly built homes, businesses selling commercial premises, or any vendor disposing of immovable property that forms part of the assets of their enterprise.

It is important to understand that the question of whether the seller is a vendor drives this analysis — not the buyer's VAT status. A buyer who is not registered for VAT can still benefit from the transfer duty exemption if the seller is selling in their capacity as a VAT vendor.

A sale of a business as a going concern (where both parties are VAT vendors and the applicable conditions are met) is typically zero-rated for VAT — meaning no VAT is charged. Even in this scenario, transfer duty remains exempt.

Here is how the two taxes interact, at a glance:

Since 25 July 2006, a sweeping exemption has protected transfers of property between spouses — covering both scenarios where a marriage ends. When a surviving spouse inherits property from their deceased partner, or when a divorced spouse acquires their former partner's share under a settlement agreement, no transfer duty is payable.

The same protection extends to same-sex couples and partners in civil unions, reflecting the broad definition of "spouse" in the legislation, which includes partners in any marriage, customary union, or a same-sex or heterosexual union that the Commissioner of SARS considers to be intended as permanent.

The exemption is also deliberately generous in scope: it applies whether the property being transferred is the entire property, a portion of a property, or even an undivided share in a property that is jointly held with a third party. In other words, the exemption is not limited to scenarios where the receiving spouse ends up as the sole owner of an unencumbered, standalone property.

Importantly, if the divorce settlement involves a consideration being paid by the receiving spouse — for example, paying out the other spouse's equity — the exemption still applies, provided the transfer flows from the terms of the settlement agreement.

When property is inherited through a deceased estate — whether under a will (testate succession) or without one (intestate succession), or as part of a redistribution agreement among the heirs — no transfer duty is payable by the heir or legatee. This exemption recognises that the inheritance of property is not a commercial transaction and should not attract tax in the same way a sale would.

The critical qualifying condition is that the property must have actually belonged to the deceased at the time of death. If a testator attempts to bequeath property they did not own — perhaps a property owned by a company or held by a third party — the exemption may not fully apply, and transfer duty could become payable on the portion that did not form part of the deceased's estate.

This distinction becomes particularly important in joint will and massing scenarios: where two spouses mass their estates and bequeath the combined estate to a third party, only the half-share belonging to the deceased qualifies for the heir's exemption. The other half — the surviving spouse's share — is not covered by the deceased's exemption and may give rise to a duty liability.

Property inherited by any person or entity qualifies — a company or close corporation as heir is just as eligible as an individual.

Who qualifies for the heir's exemption?

Section 9 of the Transfer Duty Act provides a family of exemptions for state entities and organisations that serve the public good. If your transaction involves any of the following, transfer duty is off the table.

A reversionary condition (sometimes called a fideicommissary or reversionary clause) is a condition written into a deed of transfer or a will that requires the property to revert back to a previous owner — or to the heirs of that previous owner — if a specific event occurs. A common example is a condition in an antenuptial contract where one intended spouse donates property to the other, subject to the property reverting to the donor if the donee predeceases the donor or if they divorce.

When a reversionary condition is triggered and the property transfers back to the original donor or their heirs, specific transfer duty rules apply that recognise the non-commercial nature of the reversion. The transfer happening as a result of the condition being triggered — not as a sale — means it may attract different treatment, and in many instances the transaction qualifies for exemption or reduced duty.

Once a reversionary condition has lapsed or been fulfilled — for instance, because the event that would have triggered the reversion can no longer occur — the title deed must be endorsed to remove the condition. This administrative step must happen before the property can be transferred by the current owner without that condition attached. The endorsement process is handled through the Deeds Office.

How reversionary conditions work, from creation to release:

Whether duty is payable or not, the Deeds Office will not register a property transfer unless a document from SARS relating to transfer duty has been lodged. When duty is payable, this document is called a transfer duty receipt. When the transaction is exempt, the document required is called a transfer duty exemption certificate — officially known as the TDREP.

Since October 2012, SARS introduced a single unified form — the TDREP — that serves both purposes. The same document is used regardless of whether the transaction is being cleared as a duty-paid transaction or as an exempt one. What changes is the content of the form and the basis on which it is issued.

The TDREP also plays a secondary but equally important role: it simultaneously serves as confirmation that the estate (in the case of deceased estate transfers) is not registered for VAT, or conversely, as proof that the transaction is subject to VAT and therefore exempt from transfer duty under section 9(15).

It is critical to understand that you cannot simply skip this step just because you believe the transaction is exempt. The TDREP must be obtained and lodged even for transactions where the exemption is completely clear-cut. The Deeds Registrar cannot register transfer without it.

The process has been entirely digitalised. Paper submissions and manual forms no longer exist — everything runs through SARS eFiling.

A few important things to know before you rely on the process: