Moving abroad and selling your home? New SARS rule could save you thousands in tax

South African homeowners could walk away with significantly more money when selling their property, thanks to a recent change by SARS to capital gains tax (CGT) rules in South Africa.

From 1 March 2026, the primary residence exclusion has increased from R2 million to R3 million. This means a larger portion of the profit made on the sale of a home can now be exempt from tax. For many sellers, this could translate into substantial savings. In some cases, it could eliminate capital gains tax.

But while the change is good news for homeowners, there is an important catch. If you are living abroad or planning tax emigration from South Africa, the timing of your sale could make a significant difference to how much tax you ultimately pay.

Top 3 takeaways for expats on the primary residence exclusion:

1. The primary residence exclusion has increased to R3 million. This means more of your property sale profit may now be exempt from capital gains tax in South Africa.
2. The benefit depends on whether your home still qualifies as your primary residence at the time of sale. This can change after tax emigration from South Africa or when you move abroad permanently.
3. Timing matters. Selling before or after becoming a non-resident can significantly affect whether you qualify for the full exclusion or face additional tax and SARS withholding tax on property.

What has changed in the SARS capital gains tax rules?

The update was confirmed in the 2026 National Budget, with SARS increasing the primary residence exclusion threshold to R3 million. This exclusion applies to the profit made when selling your home, not the selling price itself. In simple terms, it reduces the portion of your capital gain that is subject to capital gains tax in South Africa.

Previously, only the first R2 million of a capital gain on a primary residence was tax-free. Now, that threshold has been raised, giving homeowners more room to benefit.

How the R3 million primary residence exclusion works

Capital gains tax can be tricky. That’s why it’s important to understand how it applies to property. The capital gain is calculated as the difference between what you paid for the property and what you sell it for, after taking certain costs into account.
The primary residence exclusion is then applied to that gain.

For example:

• If you bought a home for R1.8 million and then sell it for R4.5 million, your capital gain is R2.7 million.
• Under the old R2 million exclusion, part of that gain would have been taxable.
• Under the new R3 million threshold, the full R2.7 million falls within the exclusion. This means no capital gains tax would be payable in South Africa.

Read more: Capital Gains Tax – what is exempt from CGT in SA? Resident vs non-resident?

How much could you actually save when selling your property in South Africa?

The increase in the exclusion threshold could result in meaningful tax savings, especially for long-term homeowners. With property values rising over time, many South Africans are sitting on gains that now fall within the new R3 million tax-free band.

This is particularly beneficial for:

• Families upgrading or relocating
• Retirees downsizing
• Long-term property owners
• Homeowners in high-growth areas

In some cases, sellers who would previously have paid tax may now walk away with their full profit.

What if you’re an expat or planning to emigrate?

This is where things become more complex. For South Africans living abroad or considering tax emigration, the sale of a property is not just a simple transaction. It becomes a cross-border tax event. While the primary residence exclusion can still apply in certain cases, it depends on whether the property qualifies as your primary residence at the time of sale.

If you have already ceased tax residency, your situation changes.

As a non-resident, you are still liable for capital gains tax in South Africa on immovable property located in the country. However, the way the transaction is handled and when the tax is triggered can differ significantly.

This is why many South Africans decide that it makes sense to sell their property before emigrating from South Africa, especially if the capital gain falls within the new R3 million exclusion.

Read more: Selling your property in South Africa – the guide to expat Capital Gains Tax implications.

What is withholding tax for non-resident sellers?

If you are classified as a non-resident at the time of sale, SARS requires a portion of the proceeds to be withheld upfront.

This is known as the SARS withholding tax on property. It applies when the property is sold for more than R2 million and is calculated as follows:

• 7.5% of the selling price for individuals
• 10% for companies
• 15% for trusts

This withholding tax amount is withheld by the transferring attorney and paid directly to SARS before the seller receives the balance.
It is important to understand that this is not the final tax liability. It is an advance payment toward your overall capital gains tax obligation. Depending on your actual tax position, you may need to pay more, or you could be eligible for a tax refund.

Is it possible to reduce withholding tax when selling immovable property?

Yes, in some cases. Non-resident sellers can apply to SARS for a directive to reduce or even eliminate the withholding tax. This is typically done if:

• The property is sold at a loss
• Your overall tax liability is expected to be low
• You qualify for certain exemptions

However, this requires proper planning and supporting documentation, and the process can take time.

Should you sell before or after tax emigration?

This is one of the most important questions for South Africans abroad. Selling before completing tax emigration to South Africa could allow you to fully benefit from the primary residence exclusion, particularly if the gain falls within the R3 million threshold.

Selling after becoming a non-resident may still result in tax being payable, along with the added complexity of non-resident property sale in South Africa rules and withholding tax.

Each situation is different, and the right decision depends on factors such as:

• Whether the property still qualifies as your primary residence
• The size of the capital gain
• Your broader tax position
• Your long-term financial plans

Read more: The tax implications of selling your South African property as a non-resident.

What counts as a primary residence?

When we say “whether the property still qualifies as your primary residence”, we’re talking about whether your home still meets SARS’s definition of a primary residence at the time you sell it. That definition determines whether you can use the primary residence exclusion (now up to R3 million).

For SARS, a primary residence is generally:

• The home you ordinarily live in
• The property you use as your main place of residence
• A property that is registered in your name (or jointly owned)

It’s not just about ownership. It’s about actual use.

When does a property stop qualifying as a primary residence?

A property may no longer qualify as your primary residence if:

1. You move out permanently. If you leave South Africa and live abroad full-time, the property is no longer your main home.
2. You rent it out. If the property becomes an income-generating asset, SARS may treat it differently. (There are partial exemptions in some cases, but it’s not always straightforward.)
3. You complete tax emigration from South Africa. Once you cease to be a tax resident:
   -You are no longer “ordinarily resident” in South Africa
   -The property may no longer meet the criteria for a primary residence exclusion.

Why this matters for CGT

The primary residence exclusion (R3 million) only applies to the portion of time the property qualifies as your main home. So:

• If you sell while still living in the property, you’re more likely to get the full exclusion.
• If you sell years after emigrating or renting it out:
  – You may only get a partial exclusion, or
  – In some cases, less favourable tax treatment

Let’s use a simple example:

• You have lived in your home for 10 years
• Then move overseas and rent it out for 5 years
• Then sell it

SARS may:

• Apply the primary residence exclusion only to the 10 years you lived there
• Tax part of the gain linked to the 5 rental years

Long story short? Whether the primary residence exclusion applies comes down to: is this still your main home in the eyes of SARS at the time of sale?

If not, the full capital gains tax relief may not apply.

FinGlobal: cross-border financial and tax specialists

The increase in the primary residence exclusion is a great opportunity for South African homeowners to reduce or even eliminate capital gains tax on the sale of a property. But for expats and those considering tax emigration from South Africa, timing and proper planning are critical.

Selling at the right stage could mean the difference between a tax-free gain and a far more complex, costly outcome, especially when SARS rules around non-residency and withholding tax come into play.

That’s where FinGlobal can help. Our team of cross-border specialists can guide you through every step, making your financial transition as seamless and hassle-free as possible. We’re also here to assist with cashing in your retirement annuities, as well as claiming any tax refunds you might be due.

Whether you’re planning your exit or already living abroad, we’ll help you structure your affairs efficiently to stay compliant and maximise your financial outcome.

Get in touch with FinGlobal today to take the guesswork out of your cross-border tax journey when relocating overseas.