The key to creating sustainable wealth and planning for your future retirement is to invest your money wisely today. Putting your money to work in the stock market can yield fantastic returns, but there is also the risk of losing money if the market crashes or underperforms. As such, it’s always a good idea to balance your investment portfolio with a number of stable investments.
With this in mind, let’s take a look at what you need to know about buying property in South Africa, as a non-resident.
Can a non-resident buy a house in South Africa?
Yes. There are no legal restrictions to prevent non-residents from buying and owning property in South Africa. So even if you have permanently left South Africa and completed tax emigration to become a non-resident, you are still welcome to invest in property in the Republic. In fact, buying property has become particularly attractive for South African expats living abroad, given that selling prices are reasonable, the exchange rate is more than favourable.
All of these factors make the South African property market ripe for foreign investment and one of the major benefits of buying property in South Africa as a former resident (now non-resident) is that you’re not buying blind. You understand how the South African real estate market works and which suburbs are to be avoided. As a former resident, you have the inside scoop on the South African property market even though you now live abroad.
Can you buy a house in South Africa If you are not a tax resident?
Given that South Africa has one of the most progressive property registration systems in the world, non-residents will find it relatively easy to buy and sell property in South Africa. As a non-resident you can even externalise the original foreign capital you used to make your initial purchase, and transfer out any sale profit once you’ve paid tax. As mentioned, buying property in South Africa as a non-resident has its advantages.
Buying property in South Africa as a non-resident is not as straightforward as it was when you were still a resident, however, and there are a number of things to bear in mind as you approach the process. You have a legal obligation to disclose your non-resident status during the purchase of any property and your status must also be noted on the property title deed. This is to ensure that you are charged withholding tax when you sell the property at some point in the future.
Read: the tax implications of selling property as a non-resident in South Africa
What is needed when buying property in south africa as a non resident?
Can I as a South African resident buy a property in SA from overseas? The short answer is yes. The long answer is still yes, but when purchasing property in South Africa as a non-resident you must be aware of the following five things:
- Your options for financing are somewhat limited. South African banks will likely give you no more than 50% of the asking price as a home loan, the rest you will have to float as a cash payment.
- You can get this cash back, however. Money spent on the purchase of property in South Africa as a non-resident can come from overseas or from money you already have in the country. Once you’ve sold the property, you can transfer this money offshore.
- There are a number of extra paperwork steps. In terms of handling the property sale paperwork, if you are not physically present in the country to sign the bond agreement or the transfer of ownership documents, as the buyer it is your responsibility to have these certified and stamped at either a Notary Public, (depending on the country you’re signing from) or you may have to have the documents Apostilled; or signed at a South African embassy. The estate agent handling the sale should point you in the right direction, upon disclosure of your non-resident status.
- There are a few extra costs involved. When buying property as a non-resident, transfer duty must be paid if the property value is over R1 million. This is nothing new to you. When buying off-plan, there is usually no transfer duty, and here the only additional cost will be VAT.
- As a non-resident buyer, you must plan for the future tax implications. You must ensure you are registered with the South African Revenue Service (SARS) so as to facilitate any future Capital Gains Tax liability when you sell your property. If you receive any rental income from your South African property, you will be taxed accordingly.
Selling property bought as a non-resident
When it comes time for you to sell the South African property you bought as a non-resident, you will need to be able to handle the following:
- You will be subject to a withholding tax of a certain percentage on the proceeds of the sale of a property in excess of R2 million.
- This tax is owed until SARS acknowledges clearance of any amount that is to be paid to you, the seller or to your agent.
- You can reduce your withholding tax obligation by requesting a tax directive from SARS before the transfer, in which case the amount (if any) as specified by SARS will be withheld.
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