Robyn Kymdell, admitted attorney at Foreign Buyer Property Solutions, delves into the minutiae that need to be considered when determining how much capital gains tax needs to be paid on the sale of one’s primary residence.

In his 2026 Budget speech, the Minister of Finance announced an adjustment to the capital gains tax (CGT) exclusion for primary residences, increasing it 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 sale of a “primary residence” in South Africa by R1 million. If you fall into the top marginal tax bracket, it means you’ll save R180 000.

Where is this change in the promulgated tax law?

The latest tax law changes in South Africa were promulgated on 1 April 2026 and consist of 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.

But nowhere in any of these amendments will you find mention of this increase in the primary threshold to R3 million. The threshold increase is not promulgated in law in the same manner as the new SARS tax tables.

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.”

Therefore, 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.

What applies if you sold your property over this period?

Where you were in the process of selling over the period, it is very important to understand whether your sale falls under the old or new dispensation.

If your sale was concluded before the effective date, you only get R2 million exempt on the sale of a primary residence sale. However, where tax law recognises the sale after the effective date, you get R1 million more tax-exempt income.

South African tax law is clear: a capital gain is triggered at the time of disposal.

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; the timing is determined by when the sale agreement becomes unconditional and fully operative and enforceable under 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.

The exact legal wording of the tax law

The critical part of our tax law to consider is paragraph 13(1)(a) of the Eighth Schedule to the Act, which reads as follows –

“13. Time of disposal.

(1) The time of disposal of an asset by means of—

(a) a change of ownership effected or to be effected from one person to another because of an event, act, forbearance or by operation of law is, in the case of—

(i) an agreement subject to a suspensive condition, the date on which the condition is satisfied;

(ii) any agreement which is not subject to a suspensive condition, the date on which 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.

Property transactions are often subject to suspensive conditions; the most simple and common example of such a condition is that the buyer must 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.

To put it simply:

• If the sale agreement was concluded or suspensive conditions were fulfilled before 1 March 2026, then the R2 million exclusion applies, even if the transfer occurs later.
• If the sale agreement was concluded or suspensive conditions were fulfilled on or after 1 March 2026, then the R3 million exclusion applies.

So if the sale agreement became binding before 1 March 2026 but the transfer was only registered later, unfortunately the lower R2 million exclusion still applies.

Consider a property sold with a profit of R2.5 million:

• Under the R2 million primary residence exclusion, R500 000 of the profit remains taxable and will be subject to capital gains tax.
• If the transaction was legally concluded after 1 March 2026, the R3 million exclusion would apply. This means the full profit falls within the exemption, and no capital gains tax will be payable.

“Effective dates”, later documentation and re-signature

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.

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.

The specific drafting of an agreement can therefore influence when a disposal is regarded as having occurred for tax purposes.

Final thoughts

Property sale agreements are highly specific, and even small differences in wording or conditions can influence the tax outcome.

This post was based on a press release issued on behalf of Foreign Buyer Property Solutions.