Home buyers are generally well aware of the ‘hidden costs’ of buying a home. One such cost is transfer duty which is calculated as a percentage of the agreed purchase price.
Determining the amount of transfer duty payable to SARS is not always a straightforward affair. What is the effect, for example, if the seller and purchaser agree that the purchaser will pay the commission due to the seller’s estate agent?
SARS calculates transfer duty on the cost of the property to the buyer. Therefore, if the seller pays the estate agent’s commission from the proceeds of the sale, which is the case in the majority of transactions, the transfer duty is calculated on the full purchase price. However, where parties do agree that the commission will be paid by the buyer, the transfer duty is calculated on the total cost to the buyer, being the purchase price plus the commission amount.
Take care when negotiating the terms of an agreement and contact us for assistance at STBB before putting pen to paper.