Tax & estate planning · South Africa
When Does Capital Gains Tax Apply in South Africa?
Capital gains tax can arise when you dispose of an asset, or the law treats you as having disposed of it, and a taxable capital gain remains after the applicable rules, exclusions and losses. It is not a flat tax on the sale proceeds. For an individual, part of the net capital gain is included in taxable income; the resulting income-tax increase depends on the person's other taxable income.
Before estimating the tax, establish who owns the asset, whether the gain is capital or revenue, when the disposal occurs and what base cost can be supported. A correct percentage applied to the wrong amount still produces a wrong answer.
In this article
A sale is not the only trigger
SARS identifies sales, donations, exchanges, losses, death and ceasing tax residence among events that can trigger disposals or deemed disposals. An event may create a tax consequence without producing sale cash. South African tax residents are generally within the CGT system for assets in South Africa and abroad; non-resident rules are narrower. SARS: Capital Gains Tax
The legal timing can also differ from the cash receipt or property transfer date. The SARS introductory guide distinguishes an unconditional agreement from an agreement subject to a suspensive condition: the latter's disposal date generally depends on fulfilment of that condition. Do not assume the Deeds Office registration date determines the tax year. Have the actual agreement assessed where timing is material. SARS ABC Guide, section 3.2, printed page 2
First decide whether this is a capital gain
An investment label is not conclusive. SARS's current share-owner guide explains that intention and surrounding facts help distinguish capital investment from revenue activity, subject to applicable statutory rules. Frequent dealing, funding and reasons for buying or selling can matter. Employee share schemes and corporate actions can add different rules. This article's example assumes the assets are properly held on capital account; it does not determine that classification for you. SARS Tax Guide for Share Owners, Issue 9, sections 2–3
Work from supported base cost
Base cost is compared with proceeds to establish the asset's gain or loss. It can include qualifying acquisition, improvement and disposal costs, subject to the rules and the treatment of amounts already deducted from income. It is not automatically the original purchase price, the current loan balance or every rand spent on the asset.
SARS's base-cost guidance distinguishes qualifying costs from ordinary holding expenses such as repairs, insurance and rates. Keep the acquisition documents, qualifying invoices and disposal costs. Assets held before 1 October 2001, inherited assets and non-arm's-length transactions may need special valuation or basis rules. SARS: What is base cost?
Paying off debt from the sale proceeds changes the cash you receive. It does not, by itself, establish the capital gain. Treat the tax calculation and the cash-settlement statement as related but separate records.
A complete individual example for the 2027 tax year
Assume an individual under 65, resident in South Africa, sells a qualifying capital investment in September 2026 for R1.2 million. The asset was acquired after 1 October 2001 for R700,000, with R20,000 of qualifying acquisition costs and R30,000 of qualifying disposal costs. None of those costs was previously deducted from income. There is no asset-specific exclusion or rollover.
The individual has another allowable capital loss of R60,000 in the same tax year and an assessed capital loss of R20,000 brought forward. There are no other gains or losses. The R50,000 individual annual exclusion for the 2027 year is applied once to the year's total, not separately to each sale. SARS's current annual-exclusion table distinguishes it from the R40,000 amount for 2017–2026. SARS annual exclusion
| Calculation | Rand |
|---|---|
| Proceeds | R1,200,000 |
| Base cost: R700,000 + R20,000 + R30,000 | Minus R750,000 |
| Gain on this sale | R450,000 |
| Other allowable capital loss this year | Minus R60,000 |
| Current-year gains less losses | R390,000 |
| Individual annual exclusion | Minus R50,000 |
| Aggregate capital gain | R340,000 |
| Assessed capital loss brought forward | Minus R20,000 |
| Net capital gain | R320,000 |
| Taxable capital gain at 40% inclusion | R128,000 |
The 40% is an inclusion rate, not the income-tax rate. The ordering and current individual inclusion treatment are set out in SARS's August 2026 share-owner guide, section 5.7. The values above are original hypothetical inputs, not a reproduction of its example. SARS Tax Guide for Share Owners, printed pages 31–33
Suppose other taxable income is R600,000 and only the primary rebate applies. Adding R128,000 produces total taxable income of R728,000. Under the 2027 individual tax table, income tax increases from R132,907 to R179,953: an additional R47,046 attributable to the capital gain in this simplified case. The increment spans the 36% and 39% brackets, so multiplying the whole inclusion by the final marginal rate would overstate it. SARS individual tax rates
The calculation illustrates why “18% CGT” is not a universal shortcut. SARS's maximum effective individual rate is 18%, reflecting 40% inclusion at a 45% marginal income-tax rate. It is not 18% of every sale price, nor necessarily 18% of the gain before exclusions and losses. Companies and other trusts have different treatment; do not transfer this individual calculation to them. SARS CGT rate summary
A capital loss is not a salary deduction
An assessed capital loss is carried within the capital-gains system and cannot simply be deducted from salary or pension income. Its use depends on the applicable loss rules and future capital gains. The annual exclusion also affects the determination of a current-year aggregate loss; a loss is not automatically a future tax credit equal to its face value. SARS: Assessed capital loss
In a portfolio review, obtain the actual assessed loss brought forward and reconcile it to the tax assessment. A broker's unrealised-loss column is a different number. A proposed transaction should still have an investment purpose; the prospect of a deduction does not by itself justify creating a loss.
Exclusions have conditions and dates
SARS's 2027 rate summary lists a R3 million primary-residence gain-or-loss exclusion and a R440,000 individual annual exclusion in the year of death. These replace older headline amounts, but they do not make every home sale or estate tax-free. The ordinary R50,000 annual exclusion in the example is not the year-of-death amount. SARS current CGT exclusions
For a home, ownership, domestic use, periods of occupation, business use and the extent of qualifying land can affect the result. A holiday home or property held in an ordinary company does not acquire primary-residence treatment just because a family uses it. Joint ownership also needs the correct allocation. The detailed SARS residence page contains historical examples, so read its conditions alongside the current tax-year amounts. SARS primary-residence conditions
For assets in an estate, separate CGT from estate duty and from the cash the executor needs. A tax calculation is not a liquidity plan. Use the estate-duty article and the existing Estate Liquidity Calculator for those distinct questions.
What could change the decision to sell?
The strongest reason to proceed despite a tax bill may be reducing unaffordable concentration, meeting a necessary cash need or leaving an unsuitable investment. Avoiding all realised gains can preserve a risk the household cannot afford. Conversely, a sale with little investment benefit may create tax and costs needlessly.
Compare the no-sale case with the actual net proceeds and the intended use of the money. Establish the owner, tax residence, disposal date, classification, base cost, annual gains/losses and available assessed capital loss. Test whether another person's or entity's assets have accidentally been included in the same calculation. Obtain an estimate of the tax cash requirement and its payment timing before committing all proceeds elsewhere.
For direct-share decisions, Share Portfolio Guidance can consider the portfolio alongside its tax constraints. A Financial Clarity Review is relevant when a proposed sale affects several household arrangements. The educational calculation above remains usable without either service.
Sources and calculation basis
Sources were accessed on 6 September 2026. The individual example uses the 2027 tax year, 1 March 2026 to 28 February 2027, and places the disposal in September 2026. SARS's Share Owners Guide Issue 9 is dated 6 August 2026. The older ABC Guide covers 2024 and is used only for the stated disposal-timing distinction, not current thresholds. The annual-exclusion and rate tables supply current amounts. Some detailed SARS pages retain historical examples; a recent webpage footer does not make every example current.
All amounts and circumstances in the worked example are hypothetical. The examples above show the gain-to-tax bridge and sensitivity to other taxable income. These examples are not a tax return or a ruling on a particular disposal.
General education only. Material disposals need current, fact-specific tax advice, particularly for trusts, companies, non-residents, inherited assets, employee schemes and uncertain capital-versus-revenue treatment.