Property investment in South Africa in 2025 necessitates a thorough understanding of tax changes implemented this year that affect the property market. While the news can leave you feeling like there is a change every minute, it’s not actually that dramatic, and we can break down what is going on for you as simply as possible.
Remember, you are always welcome to contact a consultant at IGrow Chartered Accountants if you would like to know how your own property portfolio might be affected, or if you wish to discuss tax management strategies as a property investor.
This year, there are changes to VAT and transfer duty fees that you need to be aware of as an investor, and this post delves into these key tax updates that affect property market movements and fluctuations in South Africa in 2025.
We’ll explore how IGrow investors must plan for or can benefit from these property tax updates.
This blog post delves into key tax updates that affect property market movements and fluctuations in South Africa in 2025. We’ll explore how IGrow investors can benefit from these property tax updates
Table of Contents
- 2025 VAT updates affecting property Investors
- Transfer Duty-fee threshold change
- Home office tax deductions available to tenants
1. 2025 VAT updates affecting property Investors
The increase in VAT from 15% to 15.05% from 1 May 2025 impacts some property transactions, but not residential buy-to-let investment properties.
Here is where you might be affected:
- If the seller is a VAT vendor and uses the property to deliver taxable supplies, VAT applies to the sale of the property
- If the purchaser is also a VAT vendor and the property will be used to deliver taxable supplies, they may be able to claim back the input VAT. It is important to note that if the purchaser will use the property for residential letting, they will not be able to claim the input VAT on the property purchase, as residential letting is an exempt supply
- If the seller is not a VAT vendor, Transfer Duty applies instead (which follows a different scale). Transfer duty thresholds have been adapted favourably in 2025.
- When both seller and purchaser are VAT vendors and the property is sold as a going concern, VAT may be levied at 0%. This is not applicable if the purchaser will use the property for residential letting (which is exempt).
Please speak to IGrow Chartered Accountants if you would like to know if any VAT changes affect your property portfolio. Setting up appropriate entities like companies and trusts to manage your tax structure can significantly reduce tax burdens on your investments.
2. Transfer Duty Tax updates
Transfer duty was adjusted for the effect of inflation in the National Government Budget Speech, offering some relief to property investors as it means savings and even zero transfer duty for buying property in some price ranges. (Read more about government plans and new regulations in 2025 in one of our recent blog posts: South African Budget Speech: How Does This Affect Property Investors?).
The Transfer duty is a significant tax on property purchases in South Africa. When looking at property sales, transfer duty is applied to properties that cost more than R1.21 million on a sliding scale.
This makes entering the property “playing field” easier for first-time buyers. It also has a positive effect on investors buying properties that fall into lower price categories.
The new transfer duty thresholds from 1 April 2025 (based on the 2025/2026 SARS Tax Pocket Guide Report) are:
| Properties valued under R1.21 million | zero transfer duty |
| R1 210 001 – R1 663 800 | 3% of the value above R1 210 000 |
| R1 663 801 – R2 329 300 | R13 614 + 6% of the value above R 1 663 800 |
| R2 329 301 – R2 994 800 | R53 544 + 8% of the value above R 2 329 300 |
| R2 994 801 – R13 310 000 | R106 784 +11% of the value above R2 994 800 |
| R13 310 001 and above | R1 241 456 + 13% of the value exceeding R13 310 000 |
As an example, if you are buying a property in the second category, for R 1,5 million (which falls above R1,210,001 and below R 1,663,800), you will do the following sum:
R1,500,000 – R1,210,000 (as you only pay on the amount OVER R1, 21m)
= R290,000.
3% of R290, 000 = R8,700
So the transfer duty payable for this property from 1 April 2025 would be R8,700.
3. Home office tax deductions available to tenants
If your tenant uses part of the rental property’s area for business (for example, as a home office), they can potentially claim a home office deduction on their tax return. The deduction would apply to a portion of their rental expenses.
“Employees who work from home more than 50% of the time, and have set aside a room to be occupied for the purpose of “trade”, may be allowed to deduct certain expenses incurred in maintaining a home office.” (Source)
If an IGrow investor positions their rental property as having a “home office room”, they can sell it as a drawcard, as many tenants like working from home nowadays, and can claim the tax deduction if there is a special room they can allocate to this. This deduction can include rent, utility bills, and home office-related costs like internet and stationery expenses.
An IGrow property tax consultant could help your tenants benefit from creating a home office space. This makes your property more desirable to tenants. It is, therefore, an interesting idea for property owners in South Africa to advertise a room in their rental property as a “work from home office”. (Source)
Conclusion: Key tax considerations for IGrow investors in 2025
As a property investor in 2025 in South Africa, you will have gathered that it helps to keep abreast of key developments in taxes related to property. VAT amendments and transfer duty exemptions are the two big changes this year, and you might want to position some existing benefits, such as home office tax deductions, as attractive to tenants at a time when there are more and more ‘digital nomads’ seeking out South African properties, as well as South Africans who work from home.
For our IGrow investor clients, the time is now to strategise and plan around these tax updates. This will lead to great savings and optimised tax deductions overall.
IGrow Chartered Accountants are at the forefront of tax-efficient property investment strategies for our clients, as this is at the core of our business. If you want to benefit from the South African tax landscape in 2025, IGrow’s team will keep you in the loop regarding legislative changes and property tax incentives. This will be critical to maximise your profits and to maintain compliance.
Consult with an IGrow property investment specialist and our property tax consultant team to navigate and benefit from these tax implications.
With strategic advice on tax structuring and 2025’s reduced interest rates, there are plenty of opportunities for IGrow’s property investors to grow their wealth. Please reach out if you need further expert advice from a qualified tax consultant.
This summary is based on the 2025 SARS tax guide, published after the delivery of the Budget Speech by the Minister of Finance. The information is provided for general informational purposes only and does not constitute financial or investment advice.
