Buying Immovable Property From A Non-Resident Seller
From 1 September 2007, a purchaser of immovable property (which has been disposed of in excess of R2 million) is obliged to withhold the amounts set out below from the purchase price payable, if the seller of the property is not resident in South Africa:
- 5% where the seller is a natural person;
- 7.5% where the seller is a company; and
- 10% where the seller is a trust.
If you are buying South African immovable property from a non-resident seller , and the purchase price is over you must complete form NR02 and an IRP6(3) using the seller’s income tax reference number and withhold the tax at the rate prescribed in section 35A(1) of the Income Tax Act, 1962.
You may withhold at a lower rate of tax if the seller supplies you with a tax directive from SARS authorising you to withhold at a lower rate. You must then submit the NR02 and IRP6(3) together with your payment to SARS.
A non-resident seller of immovable property may be entitled to request that tax be withheld at a lower or even zero rate under section 35A(2) of the act.
The reasons why a sale would attract a lower rate of CGT will depend on the facts of the particular case, for example, the person may be fully exempt from CGT, or in the case of an individual, have a low level of taxable income or have disposed of the property at a loss.
To request a tax directive you must complete form NR03 and submit it together with the offer to purchase, tax calculations and supporting documentation to firstname.lastname@example.org or use one of the other submission methods described on the form.
We at Neil Parker Attorneys attend to all the above on behalf of the Purchaser and Seller.