Complete Capital Gains Tax Guide
Complete Capital Gains Tax Guide South Africa 2026
Last Updated: June 2026 | Reading Time: 19 minutes
Understand capital gains tax in South Africa. What triggers CGT, how to calculate it, exemptions, and reporting requirements for 2026.
Table of Contents
- Quick Answer
- What Is Capital Gains Tax?
- What Triggers CGT?
- How to Calculate CGT
- Annual Exclusion and Exemptions
- Inclusion Rates
- CGT on Property Sales
- CGT on Shares and Investments
- CGT on Business Assets
- Rollover Provisions
- Capital Losses
- Common CGT Mistakes
- Frequently Asked Questions
- Related Articles
Quick Answer
Capital Gains Tax (CGT) applies when you sell an asset for more than you paid for it. Individuals have an annual exclusion of R40,000 — only gains above this are taxed. The taxable portion is included in your income at 40% for individuals (meaning only 40% of the net gain is added to your taxable income and taxed at your marginal rate). Primary residences are exempt up to R2 million. Report all disposals on your ITR12 return.
What Is Capital Gains Tax?
Capital Gains Tax is not a separate tax — it is part of income tax. When you sell an asset for more than its base cost (what you paid for it), the profit is a capital gain. A portion of that gain is added to your taxable income and taxed at your normal income tax rate.
CGT was introduced in South Africa on 1 October 2001. For assets acquired before that date, special valuation rules apply to determine the base cost.
What Triggers CGT?
CGT applies to disposals of capital assets, including:
- Property: Selling your home, rental property, or land
- Shares: Selling shares or unit trusts (except certain exemptions)
- Business assets: Selling a business, equipment, or goodwill
- Collectibles: Art, jewellery, antiques worth over R10,000
- Cryptocurrency: Selling or exchanging crypto assets
- Trust interests: Disposing of an interest in a trust
Events That Count as “Disposal”
- Selling an asset
- Gifting an asset (deemed to be at market value)
- Swapping one asset for another
- Loss or destruction of an asset (with insurance payout)
- Emigration (certain assets treated as disposed)
How to Calculate CGT
Basic Formula
- Proceeds (selling price)
- Minus Base Cost (purchase price + improvements + certain expenses)
- = Capital Gain or Loss
- Minus Annual Exclusion (R40,000 for individuals)
- = Net Capital Gain
- Multiplied by Inclusion Rate (40% for individuals)
- = Taxable Capital Gain (added to your taxable income)
Example Calculation
Scenario: Sarah bought an investment property for R800,000 five years ago. She spent R150,000 on improvements (renovations). She sells it for R1,400,000.
Calculation:
- Proceeds: R1,400,000
- Base cost: R800,000 + R150,000 = R950,000
- Capital gain: R1,400,000 − R950,000 = R450,000
- Less annual exclusion: R450,000 − R40,000 = R410,000
- Inclusion at 40%: R410,000 × 40% = R164,000
R164,000 is added to Sarah’s taxable income for the year and taxed at her marginal rate.
Annual Exclusion and Exemptions
Annual Exclusion (Individuals)
- R40,000 per tax year — only gains above this are taxed
- If you die, the exclusion for the year of death is R300,000
Primary Residence Exclusion
- Gain on your primary residence is exempt up to R2 million
- The property must be used mainly for domestic purposes
- The exclusion applies to the portion used for residential purposes
- If the property is larger than 2 hectares, the excess land may not qualify
Other Exemptions
- Personal-use assets: Cars, furniture, household items (excluding collectibles)
- Retirement benefits: Lump sums from pension, provident, and RA funds (taxed under special lump sum tables instead)
- Government grants: Certain government benefits
- Small business assets: R1.8 million exclusion on disposal of small business assets (meeting certain conditions)
- Collectibles under R10,000: Personal-use collectibles under this value
Inclusion Rates
| Taxpayer Type | Inclusion Rate | Maximum Effective Rate |
|---|---|---|
| Individuals and Special Trusts | 40% | 18% (45% × 40%) |
| Companies | 80% | 21.6% (27% × 80%) |
| Other Trusts | 80% | 36% (45% × 80%) |
CGT on Property Sales
Primary Residence
If you sell your main home where you ordinarily live, the first R2 million of gain is exempt. Any gain above R2 million is subject to CGT.
Rental Property
Rental properties do not qualify for the primary residence exclusion. The full gain (after the R40,000 annual exclusion) is taxable.
Inherited Property
Inherited property is treated as acquired at market value on the date of death (step-up in base cost). The heir’s base cost is the market value, not what the deceased paid.
CGT on Shares and Investments
Listed Shares
Selling shares on the JSE triggers CGT on the gain. Brokerage fees and securities transfer tax can be added to the base cost.
Unit Trusts
Disposing of units in a unit trust triggers CGT. Your fund manager will issue an IT3(c) certificate showing the capital gain or loss.
Tax-Free Savings Accounts
Gains within a TFSA are completely tax-free, including CGT, dividends tax, and income tax. However, contributions are limited to R36,000 per year and R500,000 lifetime.
CGT on Business Assets
When selling business assets or a business:
- Goodwill is taxable
- Equipment may have recoupment (if depreciation was claimed) plus CGT
- Small business assets may qualify for the R1.8 million exclusion
Rollover Provisions
Certain asset transfers don’t trigger immediate CGT:
- Transfer to spouse: Treated as a no-gain/no-loss transfer
- Asset-for-share transactions: Specific corporate reorganisations
- Corporate rollovers: Mergers, demergers, and liquidations meeting SARS requirements
Capital Losses
Capital losses can be offset against capital gains in the same year. Unused losses are carried forward to future years indefinitely. Capital losses cannot be offset against ordinary income (salary, rental income, etc.).
Common CGT Mistakes
- Not claiming the R40,000 annual exclusion
- Incorrectly calculating base cost (forgetting improvements)
- Not reporting crypto disposals
- Claiming primary residence exclusion on a rental property
- Forgetting to include selling costs (agent commission, transfer duty) in base cost
- Not keeping records for the entire ownership period
Frequently Asked Questions
Do I pay CGT if I sell my car?
No. Personal-use motor vehicles are specifically excluded from CGT. This applies to cars, motorcycles, and other vehicles used mainly for personal transportation. However, if you bought the car specifically as an investment (e.g., a classic car collection), CGT may apply.
How is cryptocurrency taxed in South Africa?
SARS treats cryptocurrency as an intangible asset for tax purposes. Disposing of crypto (selling, trading, or using it to buy goods) triggers CGT if you held it as an investment. If you trade crypto frequently, SARS may treat profits as ordinary income rather than capital gains. Keep detailed records of all transactions including dates, values in ZAR, and purpose. Read our crypto tax guide.
What records must I keep for CGT purposes?
You must keep records for the entire period of ownership plus 5 years after disposal. This includes: purchase agreement and proof of payment, receipts for improvements and renovations, valuations (especially for pre-2001 assets), selling agreement and agent statements, and IT3(c) certificates for financial instruments.
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