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Incompass Financial Solutions
Authorised Financial Service Provider
Graphic Centre, 2nd Floor
199 Loop Street
Cape Town, 8001 - South Africa

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Ph: +27 (0) 21 424 2936
Fax: +27 (0) 86 568 2086

Bringing Money into South Africa to Buy Property

bringing money into south africa to buy propertyBringing money into South Africa to buy property is one of the most important hurdles you will have to overcome as a foreigner.

South Africa is a popular destination for foreigners to buy property but unlike other countries you need to be aware of the effect that exchange controls will play in the purchasing process.

It is no surprise that one of the most common concerns of foreign buyers is "If i bring money into South Africa to buy property, can I take it out again?"

Below we take you through the need-to-know information to help you ensure that you can transfer your money back overseas if and when you want to.

When you can take your money back out

When you buy property in your own name:

  • Such funds may be repatriated together with any profit on the resale of the property. The profit will be liable to a deduction of any Capital Gains Tax due. Note that the title deed of the property must have been endorsed 'non-resident'.
Where you decide to buy property through share ownership in a company or as a beneficiary in a trust:
  • Where money has been brought into South Africa to acquire shares in a company or members interest in a close corporation, the money again may be repatriated together with any profit on resale. Once again it is important that these securities have been endorsed 'non-resident'.

Funds introduced into South Africa as a foreign loan to fund acquisitions of corporate entities, which own property in South Africa, may be repatriated.

  • Note this must be in line with the terms of the original loan approval by the South African Reserve Bank, so exchange control approval must be sought. Profit on resale may also be repatriated and, just like before, the relevant securities must have been endorsed 'non-resident'.

When making an offer to purchase you need to declare the entity in which you are buying the property

The exchange control regulations in South Africa, coupled with the practical implications regarding the registration of ownership of property, means you need to declare on your Offer to Purchase the entity you are buying the property in (name, trust, company etc).

In South Africa, unlike some other countries, an Offer to Purchase becomes legally biding upon acceptance by the seller. Therefore there is no opportunity to amend the contract prior to completion or registration of transfer.

What paperwork will you need?

The South African Reserve Bank record all transactions of money transfers in and out of South Africa. When bringing money into South Africa to buy property there are a few important things you need to know:

  • Ensure you keep a record of the actual transfer - known as the deal receipt or deal confirmation.
  • Keep a record of the foreign bank statement where you transferred money from.
  • Keep a record of the South African bank statement or receipt where you transferred money to.
  • Ensure the funds are allocated to the correct code by your currency company or bank and are marked 'non resident'.

A story where it all went wrong

We were contacted in 2016 by an individual who had purchased a property in Camps Bay for some ZAR7 million in 2009. The property had increased significantly in value when he sold in early 2016 and he received some ZAR13 million.

The gentleman in question wished to repatriate the funds to Germany and on sale approached his bank to do the transfer.

The bank requested a lot of documentation to be able to transfer the funds out of South Africa and unfortunately this took some time. One of the issues here was a lack of tax registration and returns by the individual.

Eventually all the paperwork was in order, after much expense and time by the gentleman, and the application submitted to his bank for the transfer back to Germany.

The transfer was refused.

Permission was denied because the individual had transferred the funds directly to an attorney's trust account in South Africa. Sadly the correct disclosure had not happened as the attorney had marked the funds (all ZAR 7 million) as fees.

Fees do not represent a fixed asset (property) purchase and therefore could not be repatriated.

The individual then contacted us. We were able to resolve the matter and get approval. However, the exchange rate had gone against the client from the time he received the funds until we could effect his transfer.

So when bringing money into South Africa to buy property...

The normal rules apply. You want:

  • The best exchange rate.
  • To avoid excessive banking fees.
  • Benefit from great service.

And perhaps most importantly:

  • You need to deal with a currency company who knows the exchange control regulations.
  • A company that can provide you with the expert advice needed to ensure you can repatriate your funds.

PLUS - You already need this company when bringing money into South Africa to buy property, not only once you have sold the property, as the damage already would've been done.

Get the best rates and service when bringing your money into South Africa.

Trusted

Our guarantees

  • Market leading forex rates.
  • No administration fees.
  • ISO 9001 accredited service levels.
  • ISO 27001 accredited security levels.
  • 100% transparency on all money transfers.
  • Tailored services to meet  your money transfer needs.
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Fax: +27 (0) 86 568 2086

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