R3 Million Tax-Free? Not Quite

R3 Million Tax-Free? Not Quite.

The primary residence capital gains tax exclusion has increased from R2 million to R3 million — but this does not mean you can sell a property for R3 million tax-free.

The exclusion applies to your capital gain, not the selling price or market value.

For example, if you bought a property for R1 million and later sell it for R3.5 million, the relevant figure is the gain, calculated after taking applicable costs and qualifying adjustments into account.

That is why good record-keeping matters. Documents relating to the purchase, transfer costs, approved improvements, professional fees and selling costs may all be relevant when calculating the gain.

The key takeaway: Tax relief can be valuable, but understanding how capital gains tax is calculated is essential. When discussing the R3 million exclusion, make sure the conversation is about the gain — not simply the selling price.