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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

Transferring Out Your Property Proceeds on Sale as a Foreigner

transferring out your property proceeds

Trransferring out your South African property proceeds on a sale as a foreigner is not as straightforward as you may think.

South Africa is not like other countries when it comes to the international movement of money due to having exchange control regulations in place.

Since Incompass has an intimate knowledge in South Africa’s extensive Exchange Control rules and regulations, we're sharing our 5 must-know points on transferring out your property proceeds on a sale as a foreigner whether you are thinking of buying a property  or have already bought and now selling:

1. Exchange Control Regulations

It is likely you have never come across exchange control regulations before, as less than 25 countries in the world impose regulations on the flow of money in and out of their country.

Simply put, foreign exchange control regulates the passage of money in and out of South Africa. In this case your ability to transfer out the proceeds of the sale of your property in South Africa.

There are certain restrictions and/or requirements in place that apply to non-residents when transferring funds out of South Africa. As a foreign property buyer or owner, you need to understand these restrictions in order to make sure you can repatriate your funds if you ever want to.

2. What is a resident and non resident

Your residency status plays a large role in what you can and cannot transfer out of South Africa. Depending on your status different rules and limits will apply to you.

Determining your residency status is not as simple as it seems. Residency for transferring money out of South Africa is not the same as residency in terms of the Department of Home Affairs or the South African Revenue Services (SARS).

As examples:

  • If you are a non-resident that owns property together with a South African resident, different rules apply for the both of you in terms of what kind of clearance you require as well as the type of documents you must produce to obtain clearance for the transfer of your proceeds.
  • If you take up permanent residency in South Africa and receive your bar-coded SA ID book, you will be considered a South African Resident for Exchange Control purposes.
  • As a non-resident there can be further complications if the purchase was partially financed by funds borrowed in South Africa. This portion of the purchase price cannot be repatriated unless the bond has been settled in full. It is important to note that during the course of the bond repayment history, the monthly and other instalments towards the bond must again have emanated from a foreign source or from rental or interest income generated from foreign funds.

For peace of mind it’s always best to speak to a money transfer company such as ourselves to determine your residency status for moving your money out of South Africa. The earlier you do this in the sale process the better.

3. Source of funds

When you repatriate funds from South Africa you will be subject to South African exchange control regulations. This means, among other things, that the Reserve Bank will investigate the initial source of your (the non-resident) investment in South Africa. Therefore, you must take care to retain documentation of the initial purchase and transfer into your name of the property.

The following documents will need to be retained to enable transferring out your property proceeds on sale as a foreigner:

  • Proof of Inflow of funds to match the purchase price (i.e. deal receipts and SWIFT confirmations);
  • Copy of Title Deed showing that the property was registered in your name;
  • Copy of the offer to purchase of the property;
  • Certificate/Headed Letter of fair value obtained from the estate agent or attorney / conveyancer. This letter must contain the following wording: property sold at market related, fair value and at transaction concluded at arm’s length.

4. Tax 

As Incompass only works within the South African banking space and not in the taxation space we are not able to provide any tax advice.

Therefore, it is best to seek advice from a tax advisor, who'll be able to provide the necessary information and guidance when it comes to the South African Revenue Services (SARS) and you earning any income and/or selling your property in South Africa.

5. How you transfer your money into South Africa matters

Many individuals buying property in South Africa will use their local bank or currency company to transfer the required funds into South Africa. As exchange controls are so rare worldwide there is little chance that these banks or currency companies will understand the repercussions of its regulations and keep any record from inception.

If the correct declarations and paperwork trail are not in place you will find transferring out your property proceeds on a sale as a foreigner become very complex or even impossible in some cases.

Therefore, Incompass ensures that the correct and required declarations are made on your behalf. Additionally, as an added service we keep all your information and transactional activity from day one.

 

Transfer the proceeds of your property sale the correct way.

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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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