By Tamaryn Campbell (Attorney l Conveyancer l Notary)
Section 35A of the Income Tax Act No. 58 of 1962 (herein referred to as the Act), deals with the withholding of tax after the disposal of an immovable property owned by a non-resident seller.
The Act ensures that SARS does not lose out on any outstanding taxes or Capital Gains Tax (CGT) on the sale of the property and places an obligation on the estate agents and conveyancers to inform the purchaser, in writing that the seller is a non-resident. The Act provides that the purchaser is required to withhold a certain percentage (depending on certain factors) where the purchaser has acquired a property from a non-resident seller for a purchase price in excess of R2 million or more.
The rate of withholding tax over the acquisition of immovable property from any person that is not a non-resident is payable as follows:
- A natural person pay’s 7.5% on the purchase price;
- A company or Close Corporation pays 10% of the purchase price; and
- A trust pay’s 15% of the purchase price.
The rate of withholding tax is an advance of the tax payable to SARS by the non-resident seller and does not consider the seller’s costs for the immovable property.
If a resident of South Africa decides to move overseas, but still owns a property in South Africa, and several years go by, you will eventually be recognised as a non-resident. Section 35A will fall into place when you decide to sell your property for a purchase price in excess of R2 million or more.
