When a foreigner sells their South African property, their tax compliance with the South African Revenue Service (Sars) comes under the microscope to ensure that all applicable tax obligations are met before the sale proceeds are allowed to be transferred offshore.

South African tax laws determine a compulsory withholding amount of the sale proceeds before any money is paid to the non-resident seller. Failure to comply comes with significant risk for estate agents, transferring attorneys or anyone handling the money. All of this happens even before Sars will issue an Approval of International Transfer (AIT) allowing the transfer of funds abroad for non-resident sellers preferring to send their money offshore.

Why the Increased Scrutiny of Non-Resident Property Sellers

As Sars’s latest guide on amounts to withhold when a non-resident sells property in South Africa has not been widely communicated or seen in the market up to September 2026, the update should be interpreted as Sars identifying this as an area requiring stricter enforcement.

The prescribed withholding percentage of the purchase price is paid directly to Sars as an advance payment in respect of the seller’s liability for normal tax for the year of assessment during which the property is disposed of, before the funds leave South Africa.

Tax experts at Foreign Buyer Property Solutions warn that the direct offshore payment of a sale price for a property, should be avoided completely. In most instances this constitutes money laundering and comes with a criminal sanction. This may also open the door for the foreign seller to get away, and the new buyer inheriting all the problems.

Non-Resident Sellers Unlikely to Qualify for Exemption

Sars’s guide sets out the prescribed withholding percentages if the non-resident seller is an individual, a company or a trust, as well as the consequences of failing to comply with the withholding requirement. 

The withholding provisions apply to property disposals where the selling price exceeds R2-million, calculated on the full purchase price.

In practice, the R2-million threshold is likely to include most, if not all non-resident property sellers who tend to own property in South Africa’s higher-value market.

Obligation to Withhold Extends Beyond the Purchaser

It its guidance, Sars makes it clear that the obligation to withhold and pay over to Sars extends to multiple parties.

The purchaser must withhold from the amount payable: 

• 7,5% if the seller is a natural person; 
• 10% if the seller is a company; and 
• 15% if the seller is a trust. 

The obligation rests on the purchaser who is personally liable if he/she knows or should reasonably have known that the seller is a non-resident, and on the estate agent or conveyancer who has assisted in the disposal of property. 

If an estate agent or conveyancer should reasonably have known that the seller is a non-resident and fails to notify the purchaser, the failing estate agent or conveyancer is jointly and severally liable for the payment of the amount.

In addition to the prescribed withholding amount, Sars states that:

A purchaser who fails to pay the amount withheld to Sars within the period allowed for payment: 

• Is liable for interest at the prescribed rate on any amount outstanding calculated from the day following the last date for payment to the date that the amount is received by Sars; and 
• Must pay a penalty equal to 10% of that amount, in addition to any other penalty or charges for which he or she may be liable under the Act. 

Importantly, Sars notes that no provision is made to waive interest. 

The latest guide reinforces the importance for all parties involved to pay attention and comply with the tax and legislative requirements governing the sale of South African immovable property by a non-resident. Timeous engagement with tax experts experienced in property transactions involving non-residents will ensure a smooth process and transfer of sale proceeds.

Written by Foreign Buyer Property Solutions