Finance Minister Enoch Godongwana.
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Despite the recently promulgated legislation remaining silent on the R3 million exclusion, the new R3 million threshold will apply by operation of paragraph 45(1A) of the Eighth Schedule to the Act.
In February, the 2026 Budget delivered by Finance Minister Enoch Godongwana announced an adjustment to the capital gains tax (CGT) exclusion for primary residences from R2 million to R3 million.
For qualifying sellers, this change effectively increases the tax-free portion on the capital gain (profit) realised on the disposal (sale) of a “primary residence” in South Africa by R1 million or using a top marginal capital gains tax rate of 18%, it means you save R180,000.
The tax law changes in South Africa, promulgated on April 1, 2026, are comprised of three key pieces of legislation: the Rates and Monetary Amounts and Amendment of Revenue Laws Act 3 of 2026, the Tax Administration Laws Amendment Act 4 of 2026 and the Taxation Laws Amendment Act 5 of 2026.
The tax law changes in South Africa, promulgated on April 1, 2026, are comprised of three key pieces of legislation: the Rates and Monetary Amounts and Amendment of Revenue Laws Act 3 of 2026, the Tax Administration Laws Amendment Act 4 of 2026 and the Taxation Laws Amendment Act 5 of 2026.
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What is often confusing is when one's estate agent, accountant or tax advisor says they have studied these amendments and cannot find where the primary threshold was increased to R3 million, says Robyn Kymdell, an Admitted Attorney at Foreign Buyer Property Solutions.
“They are correct: the threshold increase is not promulgated in law in the same manner as the new SARS tax tables.”
Foreign Buyer Property Solutions says Paragraph 45(1A) of the Eighth Schedule to the Income Tax Act (“the Act”) provides that where the Minister announces an alteration to the amount of a capital gain or loss, “…the alteration comes into effect on the date or dates determined by the Minister in that announcement and continues to apply for a period of 12 months from that date, or those dates subject to Parliament passing legislation giving effect to that announcement within that period of 12 months.”
The provider of integrated tax, immigration and cross-border advisory services for international property investors in South Africa, if one were in the process of selling over the period, it is very important to understand whether their sale falls under the old or new dispensation.
“If your sale was concluded before the effective date, you only get R2 million exempt on a primary residency sale. However, where tax law recognises the sale after the effective date, you get R1 million more tax-exempt income.”
In the context of immovable property, the time of disposal is not determined by when the transfer is registered or when the purchase price is paid or received, says Kymdell.
The attorney says the timing is determined by when the sale agreement becomes unconditional and fully operative and enforceable under the law. “This is where the expertise of a tax attorney becomes important when you want the additional exemption but are not sure whether it can be claimed.”
It says the critical part of the local tax law to consider is paragraph 13 (1) (a) of the Eighth Schedule to the Act, which reads as follows:
Time of disposal
(1) The time an asset is disposed of due to a change of ownership - whether effected or to be effected from one person to another by means of an event, act, forbearance, or operation of law - is determined as follows:
(i) If the disposal results from an agreement subject to a suspensive condition, the disposal date is the date the condition is satisfied.
(ii) If the disposal results from any agreement that is not subject to a suspensive condition, the disposal date is the date the agreement is concluded. (emphasis added)
The SARS Comprehensive Guide to Capital Gains Tax repeats this position – that the time of disposal is effectively when the agreement is fully concluded, it adds.
“Property transactions are often subject to suspensive conditions, with the simplest and most common example being that the buyer may secure a mortgage.
"In such cases, the law determines that the date on which these conditions are satisfied is the point at which the agreement becomes fully operative and enforceable for purposes of determining the time of disposal.”
Here is a basic example:
Accordingly, if the sale agreement became binding before March 1, 2026, but the transfer was, or is only registered later, unfortunately, only the lower R2 million exclusion still applies.
Consider a property sold with a profit of R2.5 million:
Because the time of disposal is legally determined at the date when the agreement is concluded, inserting an “effective date” in a contract, or attempting to change the timing through later documentation or re-signature, does not change the capital gains disposal date, says Kymdell.
They add that this is the general rule, and each agreement should be legally studied to determine the correct treatment.
SARS also explains this as follows:
Effective dates
It is a common practice for parties to insert an "effective date" in an agreement of sale which differs from the date on which the agreement is concluded. The insertion of an effective date in a contract does not have any bearing on the time of disposal laid down by para 13.
The time of disposal under a contract not subject to a suspensive condition is the date on which the agreement is concluded, not any effective date agreed to by the parties.”
Resolutive and other contractual terms
A key caveat is that certain contractual provisions in sale agreements, including resolutive or other clauses not specifically addressed in the Act, require careful legal and tax analysis, bearing in mind broader principles of contract law, says the firm.
It adds that the specific drafting of an agreement can therefore influence when a disposal is regarded as having occurred for tax purposes.
Property sale agreements are highly specific, and even small differences in wording or conditions can influence the tax outcome, says Foreign Buyer Property Solutions.
The 2026/27 Budget just handed South African homeowners a massive win, says Cor van Deventer, an attorney, notary, and conveyancer.
He says the Primary Residence Exclusion for Capital Gains Tax (CGT) has been hiked from R2 million to R3 million. If you sell your home for a profit, the first R3 million of that gain is now tax-free.
However, the reality is that SARS only gives this gift to individuals. If your home is owned by a Trust or a Company, you get zero exclusion. You are taxed on every rand of profit and at a much higher tax rate than an individual.
He adds that if one owns their house in their personal name, there are still three major traps to watch for right now.
First is the trust trap
Many buyers were told years ago to put the house in a Trust for protection. In 2026, that move could cost you a R3 million tax-free buffer. If the deed doesn't say Your Name, you don't get the break.
Second is the business-use bleed
Even if the property is in your personal name, if you have been running your business from the spare wing or renting out a cottage on Airbnb, the R3 million is apportioned. You only get the tax-free benefit for the square meterage you actually live in.
Third is the marriage technicality
If you are married in Community of Property, the exclusion is shared. If you are Out of Community of Property, the owner of the title deed carries the full exclusion
In short, van Deventer says a R1 million increase in the exclusion is only a victory if one's ownership structure is correct.
“If your home is currently sitting in a trust or a company, you are effectively trading 'protection' for a massive, avoidable tax bill on the day you sell. Before you sign an OTP, make sure your ownership actually allows you to keep your profit rather than hand it straight to SARS.”
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