Capital Gains Tax in 2026: What Hermanus Property Sellers Need to Know

If you are planning to sell your coastal home in Hermanus in 2026, understanding Capital Gains Tax (CGT) is essential. Whether you are upgrading, downsizing, or realising an investment, knowing how CGT works can help you avoid unexpected costs and plan your finances effectively.

Hermanus remains one of the Western Cape’s most desirable coastal property markets, attracting both local and international buyers. With continued demand and long-term property growth, many homeowners are likely to realise a capital gain when selling. Before listing your property, it is important to understand how these gains are treated for tax purposes according to the South African Revenue Service (SARS).

What Is Capital Gains Tax on Property?

Capital Gains Tax is not a separate tax. According to SARS, it forms part of your income tax and applies to the profit made when you sell an asset such as property.

The capital gain is calculated as the difference between the selling price and the base cost of the property.

Primary Residence Exclusion

SARS provides significant relief for homeowners through the primary residence exclusion. From 1 March 2026, the first R3 million of the capital gain on the sale of a primary residence is excluded from CGT, provided certain conditions are met:

The property must be your primary residence
It must be used mainly for domestic purposes
The property may not exceed 2 hectares in size

This exclusion applies to the capital gain, not the selling price, and can substantially reduce or eliminate any CGT liability.

Timing of the Sale Matters

A critical factor that many sellers overlook is the timing of the transaction.

The increase in the primary residence exclusion from R2 million to R3 million applies based on when the property is disposed of for tax purposes. According to SARS rules, the date of disposal is not the transfer date or the date payment is received. It is the date when the sale agreement becomes unconditional and legally enforceable.

In many property transactions, the sale is subject to suspensive conditions, such as the buyer obtaining bond approval. In these cases, the disposal date is when those conditions are fulfilled.

This distinction is important:

If the sale agreement became unconditional before 1 March 2026, the R2 million exclusion applies
If the sale agreement became unconditional on or after 1 March 2026, the R3 million exclusion applies

For example, if a property is sold with a capital gain of R2.5 million:

Under the R2 million exclusion, R500,000 remains taxable
Under the R3 million exclusion, the full gain may be exempt from CGT

This can result in a meaningful difference in the final tax outcome.

How CGT Is Calculated

SARS applies the following method to calculate CGT:

Capital Gain = Selling Price minus Base Cost
Taxable Gain = Capital Gain less applicable exclusions
Inclusion Rate = 40 percent for individuals
The taxable portion is added to your income and taxed at your marginal income tax rate

For individuals, the maximum effective CGT rate is 18 percent, although the actual rate depends on your income tax bracket.

What Counts as Base Cost?

Your base cost includes more than just the original purchase price. SARS allows a range of costs to be included, which can reduce your taxable gain:

Purchase price
Transfer duty and conveyancing fees
Bond registration costs
Estate agent commission
Costs of improvements and renovations, excluding maintenance
Certain costs directly related to the sale

Maintaining accurate records is essential to ensure all allowable deductions are claimed.

Additional SARS Considerations

To qualify for the primary residence exclusion, the property must have been used as your main residence for most of the ownership period. SARS does allow for certain temporary absences under specific conditions.

Non-resident sellers are subject to a withholding tax on the sale of immovable property in South Africa:

7.5 percent for individuals
10 percent for companies
15 percent for trusts

This withholding tax is not the final tax liability but an advance payment to SARS.

Why This Matters in Hermanus

Property in Hermanus has shown consistent long-term growth, making it attractive for both lifestyle buyers and investors. As property values increase, so does the likelihood of a higher capital gain when selling.

Understanding how SARS applies CGT enables you to:

Estimate your net proceeds more accurately
Plan your sale with greater certainty
Make informed financial decisions

Thinking of Selling Your Coastal Home in Hermanus?

Selling your home is a significant financial decision. Having the right guidance ensures that you maximise your return while navigating the process correctly.

Sources and Further Reading

SARS – Capital Gains Tax Guide for Individuals