There are no restrictions in respect of South African property ownership by non-residents.
Should a non-resident wish to purchase in the name of an entity ie a company or trust, such entity must be locally registered, and comply with the inherent requirements pertaining to that entity eg appoint a local public officer and be registered as a South African taxpayer.
A non-resident seller or purchaser married in terms of foreign law is assumed for transfer purposes to require the consent and assistance of his/her spouse, even if only one spouse is the seller or purchaser. As a result , both spouses will sign the agreement of sale, transfer documents and if applicable, mortgage bond documents.
- Both spouses will need to be identified by their passports, foreign marriage certificate and proof of their physical residential address.
A local signatory may be appointed to sign transfer documents on behalf of a non-resident. Such signatory is authorized by a General or Special Power of Attorney signed by the non-resident.
- If any document , including the Power of Attorney, agreement of sale, transfer documents or mortgage bond documents are signed outside South Africa, they must be signed in black ink before an official at a South African Consulate or before a foreign Notary Public whose signature is authenticated.
50% mortgage bonds are granted to qualifying non-residents by most South African banks.
Foreign bank guarantees are not enforceable so are understandably not accepted by conveyancing attorneys.
Strict Exchange Control requirements are to be met regarding identifying funds entering South Africa and the purpose thereof.
- If the foreign paying party is not the purchaser, funds must be formally recorded as a loan to that purchaser (to allow the purchaser to repatriate foreign funds when he/she sells)
- Proceeds of sale of a property may be transferred to a non-resident seller’s South African bank account or remittance to the seller’s foreign bank is effected via an Exchange Control process following Reserve Bank repatriation requirements. A detailed paper trail is essential proving the initial purchase and sale by the seller, including proof of all finances and the source thereof in both the purchase and sale.
Either Transfer Duty or VAT is payable to South African Revenue Services(SARS) by all purchasers (resident and non-resident).
- A non-resident person or entity/ company earning income in SA must register as a South African income tax payer.
- Withholding Tax (provisional Capital Gains Tax) is payable if a non-resident sells a property for more than R2 million . 5% of the purchase price is payable to SARS from a natural seller, 7.5% from a non-resident company and 10% from a non-resident Trust, unless a specific Capital gains tax directive is applied for prior to transfer of the property being registered.
- On the death of a non-resident seller, a non-resident enjoys the same South African resident rebate of R3.5 million on dutiable assets in SA.
REFQAH FATAAR HO-YEE
DIRECTOR PROPERTY LAW
STBB SMITH TABATA BUCHANAN BOYES
tel 021 6734700