This is another very important section for buyers of property owned by foreign sellers, as well as for agents and conveyancers dealing with the transaction.
Where the seller is non-resident, the buyer, the agent and the conveyancer are all burdened with the job of making sure that the seller pays a withholding tax to cover the capital gains tax on the property.
SARS obliges the non-resident seller to pay a withholding tax to SARS, or to ask SARS for a directive to decide how much capital gains tax should be paid from the proceeds of the sale before the balance is paid to the seller.
Depending on the identity of the seller, the amount can be either 5% of the sale price (for private individual sellers), 7.5% of the sale price (for companies and close corporations) or 10% of the sale price (for trusts).
If the amount is not retained and paid, SARS can hold the buyer responsible for this amount in full, or the agent and the conveyancer to the extent of their fees/commission.
This is a risk easily overlooked! Make sure that the seller discloses his or her residence status in the agreement.
