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LIBERTALIA PROPERTIES

About Foreign Purchasing

Purchasing Property in South Africa as a Foreign Buyer

South Africa offers an attractive opportunity for foreign investors looking to buy property. The country operates under a highly regarded land registration system, known for its accuracy and security. Every property is reflected in a land diagram, and ownership details are recorded in regional Deeds Registries, which are publicly accessible. Whether you're seeking to invest in property, establish a secondary home, or explore the vibrant property market, here's everything you need to know about purchasing property as a foreigner in South Africa.

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Foreign Property Ownership in South Africa

No Ownership Restrictions for Non-Residents

South Africa imposes no restrictions on foreign nationals or non-residents when it comes to property ownership. Foreign buyers can freely purchase property for personal use, investment, or holiday homes. However, if your intent is to live in South Africa for extended periods, you'll need to apply for the appropriate residence permit.

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Foreign Investment: Funding and Bond Options

Bringing Foreign Funds Into South Africa

Funds for property purchases can be transferred into a South African bank account, typically the trust accoun of the estate agent or conveyancer handling the transaction. This ensures that the funds are securely held until the purchase is complete. It's important to retain the bank's "deal receipt" as it will be required to repatriate funds when you decide to sell the property.

Mortgage Loans for Foreigners

Foreign buyers can apply for home loans in South Africa; however, the loan-to-value (LTV) ratio is usually limited to 50%. This means non-residents can borrow up to 50% of the property's value, with the balance paid in cash. Local banks will assess the buyer's financial standing and the source of funds.

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Tax Considerations for Foreign Property Owners

Foreign buyers are subject to the same property taxes as South African residents. However, when selling, non-residents may be liable for Capital Gains Tax (CGT) on any profits. It's advisable to consult with a tax advisor to fully understand the implications and any potential deductions.

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Need Assistance with Foreign Purchases? Contact Our Team for Guidance

The Property Buying Process

Purchasing property in South Africa is a transparent and straightforward process, but it does require understanding the legalities and steps involved.

  1. Legal Requirements for Contracts

    • All contracts must be in writing, signed by both the buyer and seller, and include essential legal information to be valid. This ensures that neither party can back out of the agreement without legal consequences.

  2. Conveyancing & Transfer Process

    • A qualified conveyancer (a legal professional specializing in property law) oversees the transfer process. Typically, the seller appoints the conveyancer, and the buyer is responsible for covering their costs. The conveyancer will:

      • Draft transfer documents.

      • Ensure compliance with government clearances.

      • Oversee the transfer of ownership at the regional Deeds Registry.

      • Cancel existing mortgage bonds on the property and register any new mortgage bonds.

  3. Costs Involved

    • Seller’s Costs:

      • Estate agent fees (if applicable).

      • Compliance certificates (for electrical, plumbing, etc.).

      • Mortgage bond cancellation fees (if the seller has an existing bond).

    • Buyer’s Costs:

      • Transfer duty (a tax payable to the South African Revenue Service).

      • Conveyancing fees.

      • New mortgage bond registration fees (if applicable).

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