Foreign property ownership in South Africa

Can foreign nationals own property in South Africa? The short answer is yes. But before we explore this topic in any detail, let’s first define what we mean by foreign national – someone who is a non-resident, meaning that they are neither ordinarily resident nor meet the requirements of the physical presence test.

The ins and outs of subject to bond approval clauses

In terms of the current statutory framework governing immovable property in the country, there are no prohibitions on the acquisition and ownership of immovable property by foreign nationals. The only restriction applies to foreign nationals who are in the country illegally.

What are the tax implications?

Foreign nationals who are in South Africa legally are subject to the same tax regulations as residents when acquiring and disposing of immovable property.

VAT vs Transfer Duty: When determining the tax implications of purchasing a property, it’s important to establish whether the seller is a VAT vendor or a non-VAT vendor. If the seller is a registered VAT vendor, the purchaser will be liable to pay VAT in terms of the Value Added Tax Act 89 of 1991 (VATA). However, if the seller is a non-VAT vendor, the purchaser will be liable to pay transfer duty. 

Capital Gains Tax: Foreign nationals who acquire immovable property in South Africa are required to register as South African taxpayers, as the disposal of this property will attract Capital Gains Tax liability.Capital Gains is defined as the difference between the amount paid to acquire the property and the amount received on disposal of the property.

What about financial assistance?

Foreign nationals can borrow money from local banks to finance the purchase of property, subject to South African exchange control regulations. When granting a loan, the bank will first establish whether the foreign national has a South African work permit.

Non-residents with work permits are considered to be residents for the duration of their work permit and may be granted more than 50% of the purchase price at the bank’s discretion.

Non-residents without work permits may not be granted more than 50% of the purchase price. The balance will therefore need to be paid in cash or through off-shore funding. 

Due to the loan percentage restrictions, it’s common for foreign funds to be brought into South Africa to settle the balance of a property purchase price. It’s important that a non-resident buyer keeps the deal receipt that is issued when they transfer foreign funds into a South African bank account, in the event that they would like to repatriate the funds in the future. 

What documentation may be required for bond approval?

Lenders may require the following documentation before considering a non-resident for bond approval:

  • A certified copy of their passport or work permit
  • Proof of residency 
  • A certificate from the South African Reserve Bank showing their eligibility for a loan
  • An international credit check
  • Three months of overseas bank statements
  • Three months of payslips 

Follow Snymans on Facebook for more legal information, tips and news about property.

Recommended for you

Minors and immovable property
Contractual Matters

When ownership of immovable property is vested in a company[post_view before=""]

There are instances where ownership of land is vested in a company. Typically, a company is registered, usually with one or two directors, and such company then takes transfer of the immovable property. The land is then held in the name of the legal entity (being the company), with the individuals or directors who intend to stay there holding shares in the company.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

An ethical approach to fee discounts[post_view before=""]

Legal fees are regulated by tariff guidelines, which are issued by the Rules Board in terms of the Legal Practice Act. Although these tariffs are guidelines, they are typically followed in the conveyancing industry. As a result, if fees are ever queried, they can usually be backed up by the regulations issued in the Government Gazette from time to time.

Read More
Minors and immovable property
Contractual Matters

The Property Practitioners Act 22 of 2019: what you need to know[post_view before=""]

In 2017, the Government undertook to interrogate the Estate Agency Affairs Act and replace it with one it deemed more suitable. The result was the Property Practitioners Act (PPA), which came into effect on 1 February 2022. In this article, we’ll be touching on some of the highlights – or lowlights, depending on your point of view – of this new act.

Read More
Minors and immovable property
Contractual Matters

Suspensive conditions revisited in the Cape Royal case[post_view before=""]

South Africa’s law of contract provides several ways in which contracting parties can protect and enforce their contractual rights. The most essential principle of contract is party autonomy – parties to a contract are free to conclude what they have agreed to, and the courts have a duty to enforce this agreement as far as possible provided it is not against the law.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

Pay with complete peace of mind[post_view before=""]

With cybercrime on the increase globally, the team at Snymans is increasingly aware of the importance of safeguarding both our clients and our business against cyber criminals when it comes to making and receiving electronic payments. In fact, phishing crimes have become such a cause for concern in South Africa that the Legal Practitioners’ Fidelity Fund has declared that it will not make good on insurance claims arising from these types of crimes.

Read More

Need more Snymans content?

Sign up for our monthly newsletter.

Foreign property ownership in South Africa

Can foreign nationals own property in South Africa? The short answer is yes. But before we explore this topic in any detail, let’s first define what we mean by foreign national – someone who is a non-resident, meaning that they are neither ordinarily resident nor meet the requirements of the physical presence test.

The ins and outs of subject to bond approval clauses

In terms of the current statutory framework governing immovable property in the country, there are no prohibitions on the acquisition and ownership of immovable property by foreign nationals. The only restriction applies to foreign nationals who are in the country illegally.

What are the tax implications?

Foreign nationals who are in South Africa legally are subject to the same tax regulations as residents when acquiring and disposing of immovable property.

VAT vs Transfer Duty: When determining the tax implications of purchasing a property, it’s important to establish whether the seller is a VAT vendor or a non-VAT vendor. If the seller is a registered VAT vendor, the purchaser will be liable to pay VAT in terms of the Value Added Tax Act 89 of 1991 (VATA). However, if the seller is a non-VAT vendor, the purchaser will be liable to pay transfer duty. 

Capital Gains Tax: Foreign nationals who acquire immovable property in South Africa are required to register as South African taxpayers, as the disposal of this property will attract Capital Gains Tax liability.Capital Gains is defined as the difference between the amount paid to acquire the property and the amount received on disposal of the property.

What about financial assistance?

Foreign nationals can borrow money from local banks to finance the purchase of property, subject to South African exchange control regulations. When granting a loan, the bank will first establish whether the foreign national has a South African work permit.

Non-residents with work permits are considered to be residents for the duration of their work permit and may be granted more than 50% of the purchase price at the bank’s discretion.

Non-residents without work permits may not be granted more than 50% of the purchase price. The balance will therefore need to be paid in cash or through off-shore funding. 

Due to the loan percentage restrictions, it’s common for foreign funds to be brought into South Africa to settle the balance of a property purchase price. It’s important that a non-resident buyer keeps the deal receipt that is issued when they transfer foreign funds into a South African bank account, in the event that they would like to repatriate the funds in the future. 

What documentation may be required for bond approval?

Lenders may require the following documentation before considering a non-resident for bond approval:

  • A certified copy of their passport or work permit
  • Proof of residency 
  • A certificate from the South African Reserve Bank showing their eligibility for a loan
  • An international credit check
  • Three months of overseas bank statements
  • Three months of payslips 

Follow Snymans on Facebook for more legal information, tips and news about property.