Is Transfer Duty Payable on Inherited Property?
Buying property in South Africa almost always comes with a transfer duty bill. Inheriting it is a different story. Whether you’re receiving a family home through a will or as one of several heirs under intestate succession, the same underlying exemption applies, though the details of how and when it applies trip a lot of families up.
Here’s what actually determines whether transfer duty is payable.
The General Rule: Inheritance Is Exempt
Section 9(1)(e) of the Transfer Duty Act exempts an heir or legatee from paying transfer duty when property passes to them from a deceased estate, whether under a valid will or through intestate succession. This is because transfer duty is a tax on transactions, and inheriting is not a transaction in the ordinary sense; the property passes to you by operation of law, not because you bought it.
This is the same exemption that applies when a surviving spouse inherits the family home, though the exemption is not limited to spouses. Children, siblings, and any other heir named in a will, or entitled under the rules of intestate succession, qualify in the same way.
Where Redistribution Agreements Fit In
Heirs are often free to restructure how estate assets are divided between themselves, rather than each taking a proportional share of every asset. This is done through a redistribution agreement, signed by all affected beneficiaries and recorded with the Master.
Provided the property being redistributed still comes from within the estate itself, and the agreement doesn’t bring in a payment or an outside asset to sweeten the deal for other heirs, the transfer duty exemption still applies to the beneficiary who ends up with the property.
Where cash or assets from outside the estate change hands to balance the agreement, that portion can fall outside the exemption, so it’s worth having the agreement checked before it’s signed.
When the Exemption Stops Applying
The exemption is tied specifically to inheriting, not to any transfer that happens to originate from a deceased estate. A few scenarios fall outside it:
If a property was not left to a particular heir, and that heir instead buys it from the estate at market value, SARS treats this as a sale rather than an inheritance, and ordinary transfer duty applies. The same goes for a beneficiary who buys out other heirs’ shares in a property they’ve inherited jointly.
And where the estate sells the property to a third party rather than distributing it to heirs, the buyer pays transfer duty in the usual way. The exemption also only applies to natural persons; a company or trust named as a beneficiary does not qualify for it.
Other Costs That Still Apply
No transfer duty doesn’t mean no costs. The estate is still responsible for conveyancing fees to register the property in the heir’s name, and a rates clearance certificate from the municipality is still required before the transfer can be registered, confirming that rates and utility accounts are settled.
There may also be capital gains tax implications for the estate itself, since the deceased is treated as having disposed of the property at its market value on the date of death. These costs are usually accounted for as part of winding up the deceased estate, separately from any transfer duty question.
Getting the Paperwork Right
The exemption isn’t automatic. The executor and conveyancer still need to submit a transfer duty declaration to SARS, motivating the exemption and supporting it with the death certificate, the will or proof of intestate succession, and the Letters of Executorship or Authority. If the paperwork is incomplete or the wrong exemption is claimed, SARS can query the transfer and hold up registration.
This is one of several reasons a properly drafted will that clearly identifies who inherits what makes the eventual property transfer considerably smoother for the people left behind.
RCS Law’s wills and estate planning services team works alongside our conveyancing attorneys to handle both the estate administration and the property transfer, so nothing falls between the two.