Capital gains tax in South Africa

South Africa does not impose a standalone capital gains tax rate. Under the Eighth Schedule of the Income Tax Act 58 of 1962, a portion of every capital gain is added to a taxpayer's taxable income and taxed at the normal income tax rate for that entity. The mechanism is called the inclusion rate. Because only a fraction of the gain is brought into income, the effective CGT burden is lower than the headline marginal rate.

All figures below reflect the changes announced in Budget 2026 (25 February 2026) and effective from 1 March 2026 (i.e., the 2027 tax year and any disposal whose sale agreement was concluded on or after 1 March 2026) [SC1][SC2].

How does the inclusion-rate mechanism work?

A "net capital gain" is calculated by aggregating capital gains and losses for the year, subtracting the annual exclusion, and applying the applicable inclusion rate. The resulting amount is added to taxable income and taxed like any other income at the entity's marginal rate.

For an individual earning above the top marginal threshold: 40% of the net capital gain is included in taxable income, which is then taxed at up to 45%. The maximum effective CGT rate is therefore 40% x 45% = 18%. Lower-income individuals face a proportionally smaller effective rate because their marginal rate is lower (the bottom bracket is 18%, producing an effective CGT rate of 40% x 18% = 7.2%).

For a company: 80% of the net capital gain is included and taxed at the 27% corporate income tax rate, producing a maximum effective rate of 80% x 27% = 21.6%.

For an ordinary trust: 80% inclusion x 45% flat trust rate = 36% effective. A "special trust" (for a person with a mental illness or physical disability, or a testamentary trust for minor heirs) is taxed at individual progressive rates with the 40% individual inclusion rate, capping its effective CGT rate at 18% [SC1].

Capital losses are ring-fenced: they may only offset capital gains, not ordinary income. Unused losses carry forward indefinitely with no time limit.

What is the annual exclusion for 2026?

Every natural person and special trust receives an annual exclusion that reduces the net capital gain before the inclusion rate is applied. From 1 March 2026 (the first increase since 2017), the exclusion is ZAR 50,000 per year [SC2].

In the year of a taxpayer's death, the exclusion is raised to ZAR 440,000. Death itself is a CGT event under Paragraph 40 of the Eighth Schedule: all of the deceased's assets are deemed to be disposed of at market value on the date of death, and the resulting gain (after the ZAR 440,000 exclusion and the 40% inclusion rate) is reported in the deceased's final income tax return. This taxable deemed gain is separate from, and in addition to, Estate Duty.

The table below summarises effective CGT rates and current exclusions by entity type.

What is the primary residence exclusion after Budget 2026?

South African residents who dispose of their primary residence benefit from the exclusion under Paragraph 45 of the Eighth Schedule. From 1 March 2026, the exclusion is ZAR 3,000,000 -- raised from ZAR 2,000,000, which had been unchanged since 2012. The timing rule is based on when the sale agreement is concluded (or suspensive conditions fulfilled), not on transfer registration date: agreements concluded before 1 March 2026 use the ZAR 2 million figure; agreements on or after that date use ZAR 3 million [SC2][SC3].

To qualify, the property must have been the taxpayer's ordinary residence and used mainly for domestic purposes. Only one property may be designated as a primary residence at any time, and the land component is capped at two hectares. Where the property was partly used for business or rental, or ownership is shared between spouses, the exclusion is apportioned accordingly. Combined with the ZAR 50,000 annual exclusion, the total shelter for an individual on a wholly residential disposal is ZAR 3,050,000 -- meaning most mid-range residential sales across South Africa will attract no CGT at all.

Budget 2026 also raised the small business disposal exclusion to ZAR 2,700,000 (from ZAR 1,800,000) for individuals aged 55 or over who dispose of a qualifying small business with a market value not exceeding ZAR 15,000,000 [SC2].

How are non-residents taxed on South African property gains?

Non-resident taxpayers are subject to South African CGT only on specified South African assets under Paragraph 2(1)(b) of the Eighth Schedule. These are: (a) South African immovable property; (b) assets of a South African permanent establishment; and (c) interests in companies where 80% or more of the asset value consists of South African immovable property and the non-resident holds 20% or more of the company [SC1][SC4].

To ensure collection, Section 35A of the Income Tax Act requires the purchaser to withhold and pay to SARS a portion of the consideration where the seller is a non-resident and the property is disposed of for more than ZAR 2,000,000. The withholding rates are:

• Non-resident individual: 7.5% of the purchase price
• Non-resident company: 10% of the purchase price
• Non-resident trust: 15% of the purchase price

The withholding is an advance payment on account of the non-resident's ultimate income tax liability -- it is not a final tax. The non-resident files a South African income tax return, calculates actual CGT using the normal inclusion-rate method (40% for individuals, 80% for companies), and credits the withheld amount against the final assessment. Where the withholding exceeds actual liability, SARS refunds the difference. Alternatively, a non-resident may apply for a SARS tax directive specifying the exact amount to be withheld, which avoids overpayment and lengthy refund processes [SC4].

Non-residents are not entitled to the annual exclusion or primary residence exclusion on these disposals.

What is the CGT base date and how are pre-2001 gains treated?

South Africa introduced CGT on 1 October 2001 (the "valuation date"). Gains accrued before that date are not subject to CGT. For assets owned before 1 October 2001, the Eighth Schedule (Paragraphs 26 to 31) provides three options for establishing base cost:

1. Time apportionment base cost (TAB): The gain is apportioned between the pre-2001 exempt period and the post-2001 taxable period in proportion to the holding period.
2. Market value at 1 October 2001: The asset's market value on the valuation date replaces the original cost as the base cost, limiting CGT to post-2001 appreciation.
3. 20%-of-proceeds rule: Base cost is deemed to be 20% of disposal proceeds, a simplified option that avoids the need to obtain a valuation.

The taxpayer may apply different methods to different assets to minimise total CGT, but the chosen method for each asset is irrevocable once applied [SC1].

For comprehensive guidance on CGT including worked examples, the SARS "ABC of Capital Gains Tax for Individuals" guide is available at sars.gov.za. For a qualified South African Chartered Accountant (CA(SA)) or registered tax practitioner who handles CGT including primary residence apportionment, trust conduit structures, and non-resident withholding, browse the South Africa country overview and the TaxPros Rated directory. Tax rules change; verify current thresholds with a registered professional before making any disposal decision.