Non-resident sellers must be on top of tax requirements

Non-residents selling property in South Africa need to ensure that their tax affairs are in order, says Mike Greeff chief executive of Greeff Properties, an affiliate of Christie’s International Real Estate.

Greeff says a recent amendment to the Income Tax Act indicates that SARS will treat the advance payment – a withholding tax of 5 percent, 7.5 percent or 10 percent of the sale proceeds required where a non-resident sells immovable property – as a final payment in certain circumstances.

Martin Sheard of STBB says that if the advance payment is greater than the taxpayer’s actual liability, SARS may retain this whole advance payment as a final payment of the assessed tax due, in the event that the taxpayer fails to submit an income tax return within 12 months after the year-end of the year in which the property was transferred.

“This is not as alarming as it sounds,” says Greeff, “but it is important to ensure that your administrative procedures are in place.”

Greeff says non-residents who decide to sell their South African property should ensure that they apply to SARS for a tax directive, or file a tax return within the 12 months following the year end of the year they sold the property.

“In this way, if they have overpaid, part of that applied withholding tax should be refunded to them,” says Greeff.

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