How much CGT will I pay when I sell a rental property?

For an individual, 40% of the net capital gain (after the annual exclusion) is added to your taxable income for the year and taxed at your marginal rate, so the effective rate is at most 18%. The gain is the selling price less selling costs and the property's base cost.

Does the primary residence exclusion apply to a rental property?

Only for the part, and the period, that you personally lived in it as your main home. A property you only ever let out gets no primary residence exclusion. If you lived in it for some years and let it for others, or let part of it, the exclusion is apportioned.

Which costs can I add to the base cost?

The purchase price, transfer duty (or VAT) and conveyancing costs on buying, the cost of improvements that are still reflected in the property when you sell, and the costs of selling such as agent's commission. Repairs you already deducted against rental income, bond costs and interest do not count.

What are the CGT exclusions for 2026/27?

Budget 2026 announced an annual exclusion of R50 000 (up from R40 000) and a primary residence exclusion of R3 million (up from R2 million) for individuals from 1 March 2026. At the time of writing they apply under the announcement procedure in paragraph 45(1A) of the Eighth Schedule while Parliament enacts them.

SARS & tax · South Africa

Capital gains tax when you sell a rental property

When you sell a property you let out, part of the profit is taxed as a capital gain. How much depends on a number you have been building since the day you bought it — the base cost — and on records many landlords stopped keeping years ago.

Updated September 2026 · ~7 min read · General guidance, not tax advice (see disclaimer)

The short version: Your gain is the selling price less selling costs and the base cost (purchase price, transfer costs and capital improvements). As an individual, subtract the R50 000 annual exclusion, include 40% of what's left in your taxable income, and pay tax at your marginal rate — at most an effective 18%. The primary residence exclusion applies only to the part and period you lived there. Keep every improvement invoice.

How the gain is worked out

Step	What goes in
Proceeds	The selling price, less the costs of selling: agent's commission, advertising, compliance certificates you pay for as seller.
Less base cost	The purchase price, transfer duty (or VAT if you bought from a developer), conveyancing and other acquisition costs, and the cost of improvements still reflected in the property.
= Capital gain	If the result is negative, it's a capital loss, which reduces your other gains and can be carried forward.
Less annual exclusion	R50 000 for individuals (total for all your gains and losses in the year).
× inclusion rate	40% for individuals (and special trusts); 80% for companies and ordinary trusts.
= Taxable capital gain	Added to your taxable income for the year and taxed at your marginal rate.

A worked example

You bought a flat in 2014 for R1 200 000, paid R40 000 in transfer duty and conveyancing, and later added a second bathroom for R160 000. In 2026 you sell it for R2 400 000 and pay R180 000 commission.

Proceeds: R2 400 000 − R180 000 = R2 220 000
Base cost: R1 200 000 + R40 000 + R160 000 = R1 400 000
Capital gain: R820 000; less the R50 000 annual exclusion = R770 000
Taxable capital gain (40%): R308 000, added to that year's taxable income
At the top 45% marginal rate: about R138 600 of tax. At a lower rate, less.

Without the bathroom invoice, the base cost is R160 000 lower and the tax up to R28 800 higher.

Improvements count; repairs don't

This is where landlords lose money. An improvement — an extra room, a new carport, a security system that wasn't there before — adds to the base cost, provided it's still reflected in the property when you sell. A repair restores what was there, and you deduct it against rental income in the year you pay for it (see our rental income tax guide). The same rand cannot do both: an expense you deducted against rent cannot also go into base cost.

Also not in base cost: bond registration costs, bond interest, rates, levies and insurance. They are either costs of finance or running costs you deduct against rent.

The primary residence exclusion — usually not for a rental

Individuals get a large exclusion when they sell their primary residence — the home they ordinarily live in. For a property you only ever let, it doesn't apply at all. It does apply partly if:

You lived in it before letting it (or after): the exclusion covers the gain for the years it was your home, apportioned by time.
You let part of your home — a flatlet, a garden cottage, a room: the exclusion covers the part you lived in, apportioned by area.

A home owned by a company or trust gets no primary residence exclusion.

The 2026/27 figures. Budget 2026 raised the individual annual exclusion to R50 000 (from R40 000) and the primary residence exclusion to R3 million (from R2 million), for disposals from 1 March 2026. At the time of writing these apply under the announcement procedure in paragraph 45(1A) of the Eighth Schedule while Parliament enacts them. The date of disposal is generally when the sale agreement becomes unconditional, not when transfer registers.

Property bought before 1 October 2001

CGT started on 1 October 2001, so only the gain after that date is taxed. For older properties you need a valuation-date value, worked out by one of three methods: a market value as at 1 October 2001 (which had to be determined and, in some cases, submitted by a deadline), 20% of the proceeds after selling costs, or time-apportionment. Which is best depends on the numbers; a tax practitioner can compare them.

Selling as a non-resident

If you are not a South African tax resident and sell for more than R2 million, the buyer must withhold 7.5% of the price (for an individual seller) and pay it to SARS as an advance on your tax, unless SARS issues a directive for a lower amount.

Keep the base cost records for as long as you own the property

The deed of sale and the conveyancer's statement from when you bought.
Every invoice for improvements, with what was done and when.
The agent's commission invoice and other selling costs.
For pre-2001 properties, whatever supports the valuation-date value.

These records outlive the usual five-year rule: you need them for the whole time you own the property, and then for five years after the return that declares the sale.

Mastendi keeps improvements out of this year's tax and in the base cost

Capital improvements go in their own register against each property — kept out of the year's rental deductions and tracked towards the gain when you sell — with the invoice attached to each one. Record each property's purchase price once, and the SARS page shows its base cost and an indicative CGT estimate, ready the day you decide to sell.

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Frequently asked questions

How much CGT will I pay?

As an individual, 40% of the gain after the annual exclusion is added to your taxable income, so the effective rate is at most 18%.

Does the primary residence exclusion apply to a rental?

Only for the part and period you lived in it yourself. A property you only ever let gets none.

Which costs add to base cost?

Purchase price, transfer duty or VAT, conveyancing, improvements still reflected in the property, and selling costs such as commission. Not repairs, bond costs, interest or running costs.

What are the exclusions for 2026/27?

Announced in Budget 2026: an annual exclusion of R50 000 and a primary residence exclusion of R3 million, for individuals, from 1 March 2026.

When is the sale "made" for CGT?

Generally when the sale agreement becomes unconditional, not on the transfer date — which decides the tax year the gain falls in.

Disclaimer: This guide is general information for South African landlords and is not tax advice. CGT rules, rates and exclusions change, the 2026/27 exclusions were not yet enacted at the time of writing, and your situation may differ. Confirm the current rules with SARS (see the Comprehensive Guide to Capital Gains Tax on sars.gov.za) or a registered tax practitioner before acting.