Ask most South Africans what capital gains tax is, and you'll get a blank stare. Ask them about paying tax when they sell their house, and suddenly it's a different conversation. CGT tends to feel abstract — until the day you dispose of an asset, and SARS sends you a bill.
Here's the first thing to understand: CGT isn't a separate tax. It's baked into your normal income tax return on SARS eFiling. When you dispose of an asset — whether you sell it, donate it, emigrate, or pass it on at death — any gain above the asset's base cost gets added to your taxable income for that year. Then your normal marginal rate does the rest.
The 2026/27 tax year (starting 1 March 2026) brought the biggest update to CGT thresholds in years. The rates haven't moved, but every major exclusion has been increased. For homeowners, especially, the changes are significant.
What Changed for 2026/27 — Budget 2026 CGT Updates
On 25 February 2026, the Minister of Finance confirmed that there were no changes to inclusion rates or the effective CGT percentages. What did change — substantially — were the exclusion thresholds, all effective from 1 March 2026:
Homeowners
The primary residence exclusion rising from R2m to R3m is the headline change. A homeowner, realising a R2.8m gain on their family home, previously faced a CGT bill. From 1 March 2026, that same gain is fully covered. That's a meaningful saving of roughly R57 600 for someone in the 41% bracket.
Who Pays CGT — and at What Effective Rate?
The inclusion rate is the slice of your capital gain that gets added to taxable income. You never pay CGT on the full gain — only on a percentage of it. That percentage depends on who you are:
So when people say the CGT rate is 18%, what they mean is: if you're an individual on the top marginal rate of 45%, you'd pay 45% on 40% of your gain. That works out to 18%. Most people aren't in the top bracket, so their effective CGT rate is lower.
One small but important update: the corporate income tax rate dropped from 28% to 27% in 2022/23, and that flow-through effect means companies now face an effective CGT rate of 21.6%, not 22.4%. Small difference, but worth knowing if your company owns property or investments.
South African tax residents pay CGT on worldwide assets. Non-residents are only on the hook for South African immovable property and branch assets — not shares, unit trusts, or crypto held offshore.
What Triggers a CGT Event?
CGT kicks in on disposal. Most people think of disposal as selling something, but SARS casts the net wider than that. You've triggered a CGT event if you:
- Sell an asset for a profit
- Donate an asset (deemed disposal at market value)
- Switch between unit trust funds — this counts as a disposal and a repurchase
- Transfer assets when tax emigrating from South Africa
- Death — your estate is deemed to have disposed of your assets on the date of death
- Change the use of a property from primary residence to rental (partial disposal)
The last two catch people off guard. Death triggers CGT on most assets in the deceased estate, which is why estate planning and CGT planning go hand in hand. And if you've lived in your home for years and then start renting it out, the clock starts ticking on the rental portion from that point.
Which Assets Are Subject to Capital Gains Tax?
CGT applies to most asset classes. Here's where we see it come up most often in practice:
- Shares and unit trusts — profits on disposal are taxable. The key question SARS always asks is whether you're an investor (CGT applies) or a trader (income tax applies)—frequency, holding period, and your stated intention all factor in.
- Investment property — buy-to-let and short-term rental properties like Airbnbs are fully subject to CGT. You can deduct capital improvements, but not maintenance costs, from your base cost.
- Crypto assets — SARS taxes crypto either as CGT (long-term holders) or income (active traders). With CARF active from 2 March 2026, SARS now receives transaction-level data directly from crypto exchanges. The days of undisclosed crypto gains are effectively over.
- Offshore investments — gains are converted to Rand at the exchange rate on the date of disposal. A weakening Rand can significantly inflate your taxable gain — even if the underlying asset performed modestly in its home currency.
- Retirement funds — growth inside a retirement annuity, pension, or provident fund is exempt from CGT. This is one of the most tax-efficient investment structures available to South Africans
CGT Exclusions and Exemptions for 2026/27
South Africa's CGT framework is deliberately designed to protect ordinary taxpayers from tax on everyday assets. These are the exclusions that matter:
- Annual exclusion — R50 000 (up from R40 000). Every individual and special trust gets this automatic deduction from their net capital gain each tax year. It resets on 1 March. Use it or lose it — it doesn't accumulate.
- Primary residence — up to R3 million (up from R2 million). Your main home qualifies if you ordinarily reside there. Where spouses co-own the property, each spouse applies their own exclusion to their share, so R1.5 million each. Importantly, you can only have one primary residence at a time.
- Death exclusion — R440 000 (up from R300 000). Applied in the year of death instead of the normal annual exclusion.
- Personal-use assets — your car, furniture, clothing, and personal boat are excluded. The asset must genuinely be for personal use — not income-generating.
- Small business exclusion (age 55+) — up to R2.7 million (up from R1.8 million). To qualify, the business must have a market value at or below R15 million (up from R10 million). This exclusion is lifetime-capped, not annual.
- Retirement fund growth and certain insurance payouts — generally CGT-exempt.
How to Calculate Capital Gains Tax in South Africa
There's no mystery to the calculation. It follows the same steps every time:
- Work out your proceeds — what you received on disposal (sale price, market value of donation, etc.).
- Subtract your base cost — the original purchase price, capital improvements, and transaction costs like transfer duty, agent fees, and legal costs. Pre-2001 assets have special rules (see FAQ below).
- The difference is your capital gain. If it's negative, you have a capital loss, which can be carried forward.
- Deduct any applicable exclusions — annual exclusion, primary residence, or other qualifying exemptions.
- Apply the inclusion rate of 40% for individuals and special trusts, 80% for companies and other trusts.
- Add the result to your taxable income and apply your marginal rate.
In short: (Capital Gain − Exclusions) × Inclusion Rate × Your Marginal Tax Rate = CGT Payable
CGT Examples for 2026/27 — Real Scenarios
Example 1: Selling the family home — fully exempt under the new R3m threshold
You bought your primary residence in 2010 for R1.7 million, spent R400 000 on improvements, and sold it in 2026 for R4.5 million. Your base cost is R2.1 million, giving a gain of R2.4 million. Under the old R2 million primary residence exclusion, R400 000 of that would have been taxable. Under the new R3 million exclusion, the entire gain is covered. CGT payable: R0.
The saving: At a 36% marginal rate, the R400 000 previously exposed would have generated approximately R57 600 in CGT. The 2026 threshold increase eliminates that liability.
Example 2: Rental property disposal
You sell an investment property for R4 000 000. Your base cost, including improvements and purchase costs, is R2 900 000. Capital gain: R1 100 000. Deduct the R50 000 annual exclusion. Net gain: R1 050 000. An inclusion rate of 40% gives you R420 000 added to your taxable income. At a marginal rate of 41%, you'll pay approximately R172 200 in CGT.
Example 3: Mixed-use property — lived in, then rented out
You have ownehave owned a property for 8 years. You lived there for 5 years, then rented it out for 3 years. Total capital gain on disposal: R900 000. SARS apportions the gain by time: the primary portion (5/8 = 62.5%) is R562 500, fully covered by the R3 million exclusion. The rental portion (3/8 = 37.5%) is R337 500. After the R50 000 annual exclusion, R287 500 × 40% = R115 000 gets added to taxable income. At 39% marginal rate, CGT comes to roughly R44 850.
Example 4: Unit trust — small gain, annual exclusion absorbs it
You invest R50 000 in a unit trust in 2022 and sell for R100 000 in 2026. Your gain of R50 000 is exactly absorbed by the annual exclusion. CGT payable: R0. You still need to declare the disposal on your tax return — SARS applies the exclusion at assessment, not automatically.
Had the gain been R120 000: R120 000 − R50 000 = R70 000 × 40% = R28 000 added to taxable income.
Example 5: Crypto — long-term holder
You bought Bitcoin in 2022 and sold it in 2026 for a gain of R200 000. Annual exclusion: R50 000. Taxable gain: R150 000. At 40% inclusion: R60 000 added to income. At a 36% marginal rate, you'll pay approximately R21 600 in CGT. Straightforward — as long as you've disclosed it. With CARF now live, SARS may already have this data from your exchange.
Legal Ways to Reduce Your CGT Bill
CGT planning isn't about avoidance. It's about using the rules as they're written. A few approaches that regularly come up in practice:
- Stagger disposals across tax years. The R50 000 annual exclusion resets every 1 March. If you can split a disposal across two tax years, you claim the exclusion twice.
- Bank your capital losses. If you've realised losses in previous years, they carry forward indefinitely and offset future gains. Keep records — many taxpayers forget they have accumulated losses sitting on prior returns.
- Spouse planning. Transfers between spouses are CGT-neutral — there's no deemed disposal. If your spouse is in a significantly lower tax bracket, consider who holds which assets before a major disposal event.
- Document your primary residence status properly. The R3 million exclusion only applies to your main home. SARS can challenge this if your residency is unclear. Utility bills, voter registration, correspondence address — keep the evidence.
- Track all capital improvements. Every rand you spend on structural improvements to a property reduces your eventual capital gain. Keep every invoice, approved building plan, and receipt for as long as you own the asset.
- Business owners approaching 55 — start planning your exit now. The small business CGT exclusion of up to R2.7 million requires your business to be valued at R15 million or less at disposal. Structuring matters enormously here.
Summary — Capital Gains Tax South Africa 2026
CGT doesn't have to be complicated. For most people most of the time, the annual exclusion, primary residence exemption, and straightforward base cost calculation are all you need to navigate it. The 2026/27 changes tilt the scales slightly more in favour of taxpayers — especially homeowners.
The mistakes people make are almost always the same: not declaring a disposal, not tracking base cost properly, not realising that switching unit trusts counts as a disposal, and not planning when a large asset sale is on the horizon.
If you're facing a significant asset disposal — a property, a business, a large investment portfolio, or emigration — get advice before the transaction, not after. The options available to you narrow considerably once the sale is concluded.
Frequently asked questions
Here are some common questions about CGT
CGT applies on disposal, and disposal is broader than most people realise. Selling an asset is the obvious one. But switching unit trust funds, donating assets, emigrating for tax purposes, and death all count as disposal events. If you're in any doubt about whether a transaction triggers CGT, get advice before you complete it, not after.
Yes, potentially. When SARS treats you as having tax emigrated, your worldwide assets are deemed disposed of at market value on the date of emigration — even if you haven't actually sold anything. This is called a 'deemed disposal'. The primary residence exclusion can apply if your SA home qualifies. Given that South Africa now participates in both CRS (Common Reporting Standard) and CARF, attempting to simply move overseas without formally notifying SARS is unlikely to end well.
Non-residents are only taxed on South African immovable property and the assets of a South African branch or permanent establishment. They don't pay SA CGT on shares, unit trusts, or crypto. When a non-resident sells SA property, the buyer is required to withhold a portion of the purchase price as an advance tax payment — 7.5% for individuals, 10% for companies, 15% for trusts. Any excess is refunded after SARS assesses the actual gain.
Not if your gain falls within the primary residence exclusion — which is R3 million from 1 March 2026. If your gain is R3 million or less and the property is your main home, you owe nothing. But you still need to declare the sale on your tax return. SARS applies the exclusion when they assess your return — it's not automatic. Undeclared property sales have a habit of surfacing through the Deeds Office data SARS receives automatically.
Not if your gain falls within the primary residence exclusion — which is R3 million from 1 March 2026. If your gain is R3 million or less and the property is your main home, you owe nothing. But you still need to declare the sale on your tax return. SARS applies the exclusion when they assess your return — it's not automatic. Undeclared property sales have a habit of surfacing through the Deeds Office data SARS receives automatically.
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