FOREIGN BUYERS GUIDE

FOREIGN BUYER’S GUIDE

The conveyancing procedure can be very daunting for non-resident buyers of South African property.

Zane Meyer from Faure & Faure Inc, an experienced conveyancing firm, offers their expert assistance and guidance in all aspects of your transaction, regarding non-resident ownership of property in South Africa.

The below frequently asked questions may help with your understanding of the process.

HOW CAN I FUND MY PURCHASE?

Funding for property acquisition in South Africa by foreign buyers can be obtained in the following manner:

Your foreign funds can be transferred into the country by means of an electronic fund transfers (EFT).

A combination of South African mortgage bond and electronic funds transfer (EFT) As a foreigner with permanent resident VISA in South Africa and working in South Africa, you can apply for a South African mortgage bond of up to 85% of the sale price. The 15% difference between the Sales Price and mortgage bond will have to be paid by means of an electronic fund transfer.

Complete Foreigners can apply for a South African mortgage bond of up to 50% of the Sale Price. The difference between the Sales Price and the mortgage bond will have to be obtained by means of an electronic fund transfer.

IS IT MANDATORY TO LIVE OR TO BE PRESENT IN SOUTH AFRICA?

To proceed with a property transaction, signatures are required by both the seller and the purchaser on various documents.

As a foreigner, you are not required to physically be present in South Africa to sign these transfer documents, but in such instance, it is advisable to prepare and sign a General Power of Attorney. This will enable a third party in South Africa to sign the necessary documentation on the foreigner’s behalf.

Signage of documents can take place outside of South Africa provided they are duly authenticated. This means that they need to be signed before a Notary Public in that country or at the offices of a South African embassy.

The conveyancing attorney, appointed in the sale agreement to register the transfer of ownership, will appear before the Registra of deeds and sign the title deed whereby ownership is passed.

As a non-resident purchaser, it is not necessary to be present in South Africa at the time. Notification of the registration of the transaction will be granted to you by the attorney.

HOW CAN I DEPORT MONEY TO MY HOME COUNTRY WHEN I SELL MY SOUTH AFRICAN PROPERTY?

Foreign sellers are allowed to transfer the full proceeds from the sale of immovable property out of South Africa provided the following conditions are complied with:

Compliance with the Exchange Control Regulations as administrated by the South African Reserve Bank;

All amounts still owing under a mortgage bond over the property needs to be settled immediately prior to or on transfer; and

Compliance with all Exchange Control regulations.

If the Seller can demonstrate that the funds used to acquire the property now being sold, originated from a foreign source, the seller shall be able to transfer the proceeds obtained from the selling of the property to a foreign country less the withholding tax applicable thereto.

IS A NON-RESIDENT RESPONSIBLE FOR PAYMENT OF ANY SOUTH AFRICAN INCOME TAX?

Non-residents are only liable for income tax on an income generated from a South African source, whilst South Africans are taxed on their worldwide income.
For example, if the property is being leased, the rental revenue will be subject to South African income tax. In addition, a non-resident is responsible for payment of capital gains tax on the disposal of a South African property. A non-resident shall be deemed a resident if that individual is physically present in South Africa for a period or periods exceeding

91 days in total during the year of assessment under consideration;

91 days in total during each of the five years of assessment preceding the year of assessment under consideration; and

915 days in total during those five preceding years of assessment. An individual who fails to meet any one of these three requirements will not satisfy the physical presence test.

In addition, any individual who meets the physical presence test, but is outside South Africa for a continuous period of at least 330 full days, will not be regarded as a resident from the day on which that individual ceased to be physically present .