03 Jun Selling? Don’t Forget To Factor These Costs In
When selling your property, it’s important to budget for potential expenses. Any delay in paying fees, and expenses, or completing necessary paperwork may slow down the transfer process and lead to a breach of your sales agreement.
The property seller is usually responsible for the following costs, among others:
- Municipal rates and taxes
- Bank penalty fees
- Estate agent fees and listing fees
- Bond cancellation attorney fees
- Compliance certificates
Compliance Certificates
Compliance fees can be costly and complicated, but they are essential for protecting the seller. Before a property can be transferred, the seller must obtain and maintain all necessary compliance certificates, including those for electricity, gas, plumbing, pests, and electric fences.
The property seller must have compliance certifications attesting to the house’s functionality. Budget for each compliance certificate, including any potential inspection findings requiring correction before certificates are issued.
Bond Cancellation Costs
The cost of bond cancellation is one of the legal fees when selling your property in South Africa, handled by the bank’s assigned attorney.
Please take note of the following expenses associated with the bond cancellation procedure for sellers:
- A penalty charge is applicable if you do not provide the bank with written notice of your intention to sell the house at least ninety days before the sale. Therefore, it is important to notify your bank in advance before listing your house for sale.
- A penalty will be imposed if the bond is cancelled within the first two years of the loan’s 20- or 30-year term.
Municipal Rates and Taxes
Remember to settle your municipal rates and taxes before your conveyancing attorney submits any transfer paperwork. Allow yourself two to four weeks to clear any outstanding balance, plus an additional four months based on your average account for the most recent period.
You can request a reimbursement from your municipality three to six months after the sale is completed. The timing depends on the final reconciliation of the buyer’s and seller’s responsibilities. It’s important to note that you have to request a refund because this is not an automated process.
Estate Agents’ Commissions
The commission for the estate agent is one of the expenses to consider before selling your property. The seller pays this commission, which is calculated as a percentage of the sale price. It’s important to remember that the agent provides a professional service to help sell the property at a good price and quickly. The agent’s commission is payment for their expertise, skill, and effort in securing the best deal and ensuring a positive experience for everyone involved.
Capital Gains Tax
Capital Gains Tax (CGT) is the tax due on the sale of an asset (such as your property) when the proceeds exceed the base cost. It is an expense that may not always be incurred but should be budgeted for.
When selling your primary residence (the home you live in), you are not required to pay Capital Gains Tax (CGT) if the gain or loss is R 2 million or less. However, if you sell a second or third property that you do not live in, you must declare any capital gain to SARS and pay tax on that gain.
Preparing Your Property For The Market
Preparing a home for sale requires a significant investment of time, money, and energy. Tasks such as cleaning carpets, painting walls, and making repairs are essential. Decluttering and preparing the house for sale is highly recommended.
Investing money in new decorative elements for your home is inevitable, whether you work with a professional or do it yourself. In addition to tidying up the yard, you should consider adding some fresh landscaping to increase the property’s curb appeal.
When buying or selling a property, it’s important to have a clear understanding of the process. Budget carefully for the expenses you will incur; some may be significant, while others may be less obvious. This will help you avoid any unpleasant surprises.
Do you need help with your bond registration or transfer process? Contact AWD Law for professional property advice before signing your offer to purchase.
Kindly be advised that AWD Law does not enter into litigation on behalf of clients. Our conveyancers specialise exclusively in the development of vacant land, property transfers, bond registrations, administration of deceased estates and notarial practice. Should you require assistance with a litigation, kindly contact The Legal Practice Council.
Contact AWD Law For Professional Property Advice before signing your Offer to Purchase.
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