June 15, 2026
The cleanest way to evaluate two property purchases on the Atlantic Seaboard is not by their headline price. It is by which tax sits on top of that price, who pays it, and when the buyer sees the bill. This is the question buyers most often arrive at the table without having asked. They look at two apartments at similar price points, assume the cost to acquire each is roughly equivalent, and only discover the difference when the conveyancer sends through the breakdown. By that stage, the deal is structured. The tax was a surprise rather than a variable.
It does not need to be. The rules are clear, they have been in place for decades, and the practical difference between the two treatments is large enough to matter.
"The effectiveness of purchasing an apartment from a developer is that the purchase price includes VAT, and it's the responsibility of the developer to pay that VAT over to the South African Revenue Service."
South African property transactions attract one of two taxes, never both. The treatment depends on who is selling.
If the seller is a VAT-registered vendor selling property in the course of their business, the transaction attracts Value-Added Tax. In practice, this means buying directly from a property developer. The VAT is calculated at 15 percent and, in almost every case, is already included in the advertised purchase price. The developer carries the legal obligation to declare and pay this VAT over to the South African Revenue Service. The buyer pays the price, signs the agreement, and the tax is settled on the developer's side of the transaction.
If the seller is a private individual selling a second-hand property, no VAT applies. Instead, the transaction attracts transfer duty, which is paid by the buyer directly to SARS through the conveyancing attorney. Transfer duty operates on a tiered scale, not a flat rate, and the rate the buyer ends up paying depends on the purchase price.
These two systems run in parallel and never overlap on the same transaction. A property is either a VAT sale or a transfer duty sale. Confirmed by SARS guidance and the Transfer Duty Act of 1949, and reinforced annually in the Budget, the principle has not changed in over thirty years.
The VAT rate is 15%. The proposed increase to 15.5 percent in April 2025, and the further proposed move to 16 percent over two years, were both withdrawn following political and legal challenge. The February 2026 Budget confirmed the rate would remain unchanged.
Transfer duty for the 2026/27 tax year runs as follows. The first R1,210,000 of the property value is zero-rated, meaning no duty is payable. Above that threshold, the rate scales through five brackets, climbing to 13 percent on the portion of value above R13,310,000. The full table is published by SARS and is the same regardless of whether the buyer is South African or foreign, individual or company.
The reason these rates are worth knowing in detail is that the headline numbers do not tell you what the buyer actually pays.
Consider a R5 million property on the Atlantic Seaboard.
If that property is sold as a resale by a private seller, the buyer pays the R5 million purchase price and then pays an additional R327,356 in transfer duty to SARS. The total cost to acquire is R5,327,356.
If that same property is sold by a VAT-registered developer, the buyer pays the R5 million purchase price. That price is VAT-inclusive. No additional tax is payable by the buyer. The total cost to acquire is R5,000,000.
The physical asset is the same. The price tag reads the same. The cost to own it differs by more than R327,000.
That number alone is not the argument for buying new builds over resales. The two segments serve different buyers, different lifestyles, and different investment cases. The argument is that the buyer should know which side of the line a given purchase sits on before they sign anything.
The confusion is structural rather than cynical. Buyers are looking at properties through portals and brochures, where the price is the variable being marketed. The tax treatment is rarely the headline. A new-build advertisement at R5 million and a resale advertisement at R5 million look identical at the level of the listing, and the difference only surfaces in the offer-to-purchase or the conveyancer's cost schedule.
The second source of confusion is that VAT, when included in a price, is invisible to the buyer in the way transfer duty is not. The VAT obligation is real, it is legally enforceable, and the developer must pay it over. But from the buyer's perspective, it is already inside the number they have agreed to. Transfer duty, by contrast, lands as a separate line item on a separate document at a later date.
This is why we describe developer purchases as administratively cleaner. It is not that they are cheaper as a category, prices for new builds reflect the cost of building. It is that the buyer faces one number, paid once, with the tax obligation handled on the seller's side.
The question to put to the seller, the estate agent, or the conveyancer is simple. Is this transaction subject to VAT or transfer duty? The answer should be definitive, not approximate. If the answer is VAT, confirm in writing that the advertised price is VAT-inclusive. The Value-Added Tax Act allows for either treatment in the contract, and an offer-to-purchase that is silent on this point can produce an unwelcome conversation later.
If the answer is transfer duty, ask for the calculated duty figure at the purchase price before you sign. A conveyancing attorney can provide this in five minutes, and it should be part of the cost stack the buyer is evaluating, not a surprise that arrives later.
The Atlantic Seaboard recorded R11.3 billion in residential sales in 2025, a 26 percent increase on the prior year, with the luxury segment growing 61 percent to R4.2 billion. We covered the structural drivers behind those numbers in the Q1 2026 quarterly read. What that volume of transactions means at a buyer level is that a meaningful share of buyers entering this market in 2026 are doing so for the first time, and a meaningful share of those buyers are working with second-hand information on how the tax side functions.
The actual rules are well-defined. The Treasury publishes them annually. SARS publishes them in plain language. The Transfer Duty Act has been operating in its current form since 2002, with periodic adjustment to the thresholds. There is no ambiguity in the framework itself, only in how it is communicated to the buyer at the point of decision.
The most useful thing a developer, a broker, or a conveyancer can do for a buyer is read them the tax line out loud before they sign. Not in the offer-to-purchase. Earlier. At the conversation where the buyer is still deciding which property to pursue.
The buyers who treat tax as a structural variable rather than an afterthought make cleaner decisions. They compare a new build at R5 million against a resale at R5 million on the terms that actually apply to them, which is to say, R5 million all-in versus R5.3 million all-in. They notice when an asking price is sitting just above a transfer duty bracket. They understand why a VAT-inclusive price from a developer is not the same kind of number as a VAT-exclusive price.
This is not sophisticated investing. It is reading the deal. The market has matured to a point where the buyer is expected to know this, and the buyers who do are better positioned at the table.
Berman Brothers Group has been developing on the Atlantic Seaboard for over 33 years. Every apartment we have sold has been sold as a new build from the developer, which means every transaction has been a VAT-inclusive purchase with the tax obligation sitting on our side. We are not advocating for this structure because we benefit from it. We are pointing out that it exists, and that the buyer should know it exists, because the alternative produces a R327,356 surprise on a R5 million purchase.
The tax line is the cleanest part of any property transaction. It is published, calculated, and predictable. The only reason it ever feels like a curveball is that nobody asked the question in time.
Paul Berman is a co-founder of Berman Brothers Group, which has been developing on the Atlantic Seaboard for over 33 years. Myth vs Fact is BBG's monthly series cutting through the assumptions buyers most often bring to the Atlantic Seaboard market. For the full Q1 2026 market read, see the Boardroom Quarterly Executive Brief.
