Property Donation Tax Calculator South Africa
Calculate donations tax, CGT (Section 58 deemed disposal), and transfer duty when gifting property to a spouse, child, or third party in South Africa
How Property Donation Tax Works in South Africa Donations tax • CGT • Transfer duty
Donations Tax on Property (Section 54–58)
When you donate immovable property, donations tax is levied on the donor at 20% of the market value (or 25% for cumulative lifetime donations above R30 million). Individual donors benefit from an annual R100,000 exemption under Section 56(2)(b). Trusts and companies receive no exemption.
Donations tax is due within 3 months of the date of the donation and is paid to SARS by the donor. If the donor fails to pay, the recipient becomes jointly and severally liable.
Section 58: Deemed Disposal at Market Value (CGT)
Under Section 58 of the Income Tax Act, when you donate property — or sell it for less than market value to a connected person — SARS treats the disposal as having occurred at full market value for CGT purposes. This means you cannot reduce your CGT liability by pricing below market.
The donor must include the capital gain in their income tax return for the year of assessment in which the donation occurs. The annual CGT exclusion of R40,000 and the primary residence exclusion of R2,000,000 still apply.
Transfer Duty Exemptions
Property transferred between spouses is exempt from transfer duty under Section 9(1)(e) of the Transfer Duty Act. This applies regardless of whether it is a sale, donation, or settlement. The conveyancing attorney must declare the spousal relationship on the transfer documents.
For all other recipients, normal transfer duty applies based on the market value of the property being donated.
Worked Example — Thandi Donates Property to Her Son
Thandi donates a R1,500,000 investment property in Johannesburg to her son Sipho. She purchased it in 2018 for R900,000. She has made no prior donations this year.
Donations tax: (R1,500,000 − R100,000) × 20% = R280,000
CGT (Section 58 deemed disposal): Gain = R1,500,000 − R900,000 − R40,000 = R560,000. Taxable gain = R560,000 × 40% = R224,000. At 36% marginal rate: R80,640.
Transfer duty (payable by Sipho): On R1,500,000 — approximately R8,700.
Total cost of donating: approximately R369,340 — compared to selling at market value where donations tax would not apply.
Frequently Asked Questions
Can I donate property to my spouse tax-free in South Africa?
Yes. Donations between spouses are fully exempt from donations tax under Section 56(1)(b) of the Income Tax Act. Transfer duty is also exempt under Section 9(1)(e) of the Transfer Duty Act. However, CGT under Section 58 may still apply if there is a capital gain on deemed disposal at market value.
What is the donations tax rate on property in South Africa?
Donations tax is levied at 20% on the taxable value of the donation, and at 25% on the portion of cumulative lifetime donations exceeding R30 million. Individual donors receive a R100,000 annual exemption; trusts and companies do not.
What is Section 58 and how does it affect property donations?
Section 58 of the Income Tax Act provides that when a person disposes of an asset for less than its market value (including by donation), the proceeds are deemed to be the market value for CGT purposes. This prevents people from avoiding CGT by gifting property at an artificially low price. The donor still pays CGT as if they sold at full market value.
When must donations tax on property be paid to SARS?
Donations tax must be paid to SARS within 3 months of the date of the donation. If the donor fails to pay, the recipient becomes jointly and severally liable. The donation must be reported on a IT144 form submitted to SARS.
Is it better to donate or sell property to a family member?
For non-spouse transfers, a sale at market value avoids donations tax (20%) but triggers full CGT and transfer duty. A donation also triggers CGT under Section 58 plus donations tax. Selling below market value to avoid donations tax does not work — SARS deems the proceeds at market value under Section 58. Consult a tax practitioner for the most efficient structure.