LEARN · PERSONAL TAX
Capital Gains Tax South Africa — The Complete CGT Guide
HIGH DISCLAIMERCapital Gains Tax (CGT) in South Africa is not a separate tax — it operates within the income tax framework under the Eighth Schedule to the Income Tax Act 58 of 1962. When a taxpayer disposes of a capital asset, only a portion of the gain is included in taxable income via the inclusion rate: 40% for individuals and special trusts, and 80% for companies and other trusts. The included amount is then taxed at the taxpayer's marginal income tax rate. The maximum effective CGT rate is therefore 18% for individuals (40% × 45%), 21.6% for companies (80% × 27%), and 36% for trusts (80% × 45%). Key exclusions include the R3,000,000 primary residence exclusion, the R50,000 annual exclusion (R440,000 in the year of death), and the R2,700,000 small business exclusion for qualifying individuals aged 55 and older.
40%
Inclusion rate — individuals
Eighth Schedule · Budget 2026/27
80%
Inclusion rate — companies
Eighth Schedule · Budget 2026/27
18%
Max effective rate — individuals
40% × 45% marginal rate
R3,000,000
Primary residence exclusion
Paragraph 44 — Eighth Schedule
R50,000
Annual exclusion — individuals
R440,000 in year of death
R2,700,000
Small business exclusion
Age 55+, market value ≤ R15M
HOW CGT WORKS IN SOUTH AFRICA
The inclusion rate mechanism — and why South African CGT is lower than it appears
A South African homeowner who sells their investment property for R4,500,000 after buying it for R1,500,000 has a capital gain of R3,000,000. Many assume they owe 18% of R3,000,000 — R540,000 — to SARS. The actual CGT liability for an individual at a 41% marginal rate is far lower: R3,000,000 × 40% inclusion × 41% marginal rate = R492,000 — and only if they have already used their R50,000 annual exclusion that year. Before any exclusions, the gain is R3,000,000. After the R50,000 annual exclusion, the net gain is R2,950,000. The included amount is R2,950,000 × 40% = R1,180,000, and CGT at 41% is R483,800. The 18% maximum effective rate applies only at the 45% top marginal rate — most South Africans pay significantly less.
CGT was introduced in South Africa on 1 October 2001 — the valuation date. Only capital gains accrued after this date are subject to CGT. Assets acquired before 1 October 2001 require a valuation date base cost, determined using one of three methods: the market value on 1 October 2001 (the preferred method — requires a valuation); the time-apportionment base cost(apportioning the full gain over the total holding period and taxing only the post-October 2001 portion); or the 20% of proceeds method (a deemed base cost of 20% of the selling price — simplest, but not always most favourable). South Africans who bought property in the 1980s and 1990s frequently overpay CGT by ignoring the valuation date election.
CGT is triggered by a disposal event — which in South Africa is broader than just a sale. A disposal includes: a sale or exchange; a donation to another person (proceeds deemed to be market value); a deemed disposal on death (all assets at market value); the granting, variation, or cession of an option; the conversion of an asset; and the forfeiture or termination of a right. This means a South African who donates shares to a family member has a CGT event even though no money changes hands — SARS treats the donation as a disposal at market value.
Capital losses are a critical planning tool. Under paragraph 5 of the Eighth Schedule, capital losses offset capital gains in the same year. Net capital losses carry forward indefinitely to offset future capital gains — but they can never be deducted against ordinary income such as salary, interest, or rental income. An investor who realises a R200,000 capital loss on a failed stock position and a R350,000 gain on a property sale pays CGT only on the net R150,000 gain (after the R50,000 annual exclusion: R100,000 × 40% × marginal rate). Capital losses on personal-use assets — vehicles, jewellery, artwork, and similar items kept for personal enjoyment — are generally disregarded and cannot offset other capital gains.
INCLUSION RATES 2026/27
Eighth Schedule · Budget 2026/27
Individual
Inclusion: 40%
Max: 18%
40% × 45% top rate
Special trust
Inclusion: 40%
Max: 18%
Same as individual
Company
Inclusion: 80%
Max: 21.6%
80% × 27% flat rate
Other trust
Inclusion: 80%
Max: 36%
80% × 45% flat rate
ALL CGT EXCLUSIONS
Annual exclusion — individuals
R50,000
Para 5 — 8th Schedule
Year of death exclusion
R440,000
Para 5(2) — 8th Schedule
Primary residence exclusion
R3,000,000
Para 44 — 8th Schedule
Small business exclusion
R2,700,000
Para 57 — 8th Schedule
Personal-use assets
Disregarded
Para 53 — 8th Schedule
Retirement fund assets
Excluded
Para 54 — 8th Schedule
TFSA investments
Excluded
S12T ITA
Life insurance proceeds
Generally excluded
Para 55 — 8th Schedule
CALCULATE CGT
Enter proceeds, base cost, and taxpayer type for an instant CGT estimate with all exclusions applied.
CGT Calculator →THE CALCULATION FORMULA
Seven steps — from disposal proceeds to CGT payable
The Eighth Schedule prescribes an exact sequence. Exclusions are applied in order — skipping a step, or applying exclusions in the wrong order, produces an incorrect CGT liability. The sequence below matches the HowTo schema in the structured data.
Calculate the gross capital gain or loss
Paragraph 3 — Eighth Schedule
Capital gain = proceeds minus base cost. Proceeds are the total consideration received or accrued on disposal — the selling price, plus any amount the buyer pays or assumes on behalf of the seller. Base cost is the original acquisition cost plus direct acquisition costs (transfer duty, conveyancing fees, STT on shares) plus the cost of qualifying capital improvements made to the asset after acquisition. Routine maintenance and repairs are not base cost — only improvements that add lasting value to the asset and are not deducted as a tax expense qualify. If proceeds are less than base cost, the result is a capital loss — proceed to Step 4.
COMMON TRAP
Selling costs such as estate agent commission and conveyancing fees on sale are deducted from proceeds (or added to base cost under an election) — not treated as a deduction from ordinary income. Many taxpayers and their advisers miss this, resulting in a higher apparent gain.
Apply the primary residence exclusion (property owners only)
Paragraph 44 — Eighth Schedule
If the disposed asset is a qualifying primary residence — a property in which the taxpayer ordinarily resided as their main home during a period of ownership — the first R3,000,000 of capital gain is excluded. If the gain is R3,000,000 or less, the entire gain is excluded and no further CGT calculation is required. If the gain exceeds R3,000,000, subtract R3,000,000 and the remainder proceeds to Step 3. The exclusion applies only to a property used as a primary residence — a holiday home, rental property, or investment flat does not qualify. If the property was only partly used as a primary residence (e.g., part rented out, or the taxpayer lived there for only part of the ownership period), the exclusion must be apportioned.
COMMON TRAP
A property used partly for business (such as a home office claimed as a tax deduction) may have its primary residence exclusion reduced. SARS apportions the exclusion to exclude the business-use portion from the primary residence treatment. Taxpayers who claim home office deductions must be aware that this potentially reduces their CGT exclusion on sale.
Apply the small business exclusion (qualifying individuals 55+ only)
Paragraph 57 — Eighth Schedule
For individual taxpayers aged 55 and older (or disposed of due to death, incapacity, or ill-health before age 55) who are disposing of an active business or an interest in one, an exclusion of R2,700,000 is available — but only where: the market value of all assets of the business does not exceed R15,000,000; the business has been conducted by the individual for at least five of the preceding ten years; the assets were used wholly or mainly in carrying on a trade; and the disposal is of a business as a going concern. This exclusion is once per lifetime — it cannot be used again once claimed. It is applied after the primary residence exclusion but before the annual exclusion.
Offset capital losses — current year and brought forward
Paragraph 5 — Eighth Schedule
All capital gains and capital losses realised during the year of assessment are aggregated. Capital losses reduce capital gains rand for rand. If losses exceed gains, the net capital loss is carried forward to the next year of assessment — it does not expire. Losses on personal-use assets (paragraph 53) and losses on primary residences within the R3,000,000 exclusion band are disregarded — they cannot reduce other capital gains. The result of this step is the aggregate net capital gain or aggregate net capital loss for the year.
COMMON TRAP
Losses on primary residences below R3,000,000 are disregarded entirely — they cannot offset gains on other assets. A homeowner who sells their primary residence at a loss of R500,000 receives no CGT benefit from that loss.
Apply the annual exclusion
Paragraph 5(1) — Eighth Schedule
For individuals and special trusts, subtract R50,000 from the aggregate net capital gain. If the taxpayer dies during the year of assessment, the exclusion increases to R440,000 for that year only. The exclusion applies once per year regardless of how many assets were disposed of — it is not per asset or per disposal. If the aggregate net capital gain is below R50,000 (or R440,000 in year of death), no CGT is payable. Companies and trusts other than special trusts do not receive an annual exclusion — they are taxed on the full aggregate net capital gain via the 80% inclusion rate.
COMMON TRAP
The year-of-death exclusion of R440,000 applies to the deceased's estate for the year of death. The executor must claim it on the deceased's final ITR12. It is a single elevated exclusion for that year — it replaces the R50,000, it is not in addition to it.
Apply the inclusion rate
Paragraph 10 — Eighth Schedule
Multiply the net capital gain (after all exclusions) by the inclusion rate for the taxpayer type: 40% for individuals and special trusts; 80% for companies and other trusts. The result is the 'included amount' — the taxable portion of the capital gain that is added to ordinary taxable income. This is not a separate tax rate — it is a fraction of the gain that becomes ordinary income, taxed at the normal marginal rate in Step 7.
Add the included amount to taxable income and apply the marginal rate
Section 26A — Income Tax Act
The included amount is added to the taxpayer's other taxable income for the year — salary, rental income, interest, business income. The aggregate is then taxed using the normal income tax table. Because the included amount sits on top of other income, it is taxed at the marginal rate that applies to the top slice of income. A taxpayer whose salary places them in the 39% bracket but whose CGT included amount pushes them into the 41% bracket pays 41% on the portion above the bracket boundary — not a flat 18% on the whole gain. This is why the 'maximum effective CGT rate of 18%' is a ceiling, not a flat rate.
COMMON TRAP
Provisional taxpayers must include anticipated capital gains in their provisional tax estimates. Failure to account for a large capital gain — such as the sale of investment property — in the provisional tax IRP6 can result in a 20% underestimation penalty on the final assessment.
BASE COST RULES
Establishing base cost — the most consequential CGT decision
An incorrect base cost is the single most common source of CGT overpayment in South Africa. For pre-CGT assets, the valuation date election is worth thousands of rands. For post-CGT assets, missed acquisition costs inflate the apparent gain.
Assets acquired after 1 October 2001
For assets purchased after the CGT valuation date, base cost is the actual cost of acquisition plus all directly attributable acquisition costs. For property, this includes: purchase price, transfer duty paid, conveyancing fees, bond registration costs, and the cost of all capital improvements made after acquisition. For shares, it includes the purchase price plus brokerage fees and any securities transfer tax (STT) paid.
WHAT COUNTS AS BASE COST — PROPERTY
✓ Purchase price
✓ Transfer duty paid
✓ Conveyancing fees on purchase
✓ Bond registration costs
✓ Capital improvements (extensions, renovations)
✓ Estate agent commission on sale (deducted from proceeds or added to base cost)
✓ Conveyancing fees on sale
NOT BASE COST
✗ Routine maintenance and repairs
✗ Rates and taxes paid
✗ Bond interest paid
✗ Insurance premiums
Pre-CGT assets — acquired before 1 October 2001
Three valuation methods are available. The taxpayer may elect whichever produces the highest base cost (lowest taxable gain), but must elect before or when submitting the return for the year of disposal.
Market value on 1 October 2001
The most favourable method for most long-held properties. Requires a formal valuation of the property's market value as at 1 October 2001. SARS accepts a retrospective valuation prepared by a registered valuer using comparable sales data from 2001. The full October 2001 market value becomes the base cost.
Best when: property values have risen steeply since 2001
Time-apportionment base cost
The pre-2001 portion of the total gain is excluded by apportioning the full gain over the holding period. Formula: TABC = (pre-CGT years ÷ total years) × total gain, subtracted from proceeds. Only the post-2001 portion is taxed.
Best when: no 2001 valuation is available and property was held for many years before 2001
20% of proceeds
A deemed base cost of 20% of the selling price. Simplest method — no valuation required. Ensures the taxable gain is always 80% of proceeds, giving an effective CGT rate of 80% × 40% × marginal rate for individuals. At 45% marginal rate, maximum effective rate on this method is 14.4%.
Best when: the other two methods produce a lower base cost than 20% of proceeds
WORKED EXAMPLES
Five scenarios — every major CGT situation covered
Each example applies the seven-step formula with real Rand figures. The scenarios cover: primary residence within the exclusion, primary residence above the exclusion, investment property, listed shares (with a capital loss offset), death deemed disposal, and small business disposal.
Primary residence — gain within the R3M exclusion. Zero CGT.
Nomsa bought her Johannesburg home in 2010 for R1,200,000. She sells it in 2026 for R3,900,000. She has lived in it as her sole primary residence throughout. Base cost includes the purchase price plus transfer duty (R28,200), conveyancing fees (R15,000), and capital improvements: a new kitchen in 2018 (R180,000) and an additional bedroom in 2022 (R320,000). Agent commission on sale is R117,000.
Because the entire gain is below R3,000,000, the primary residence exclusion absorbs it completely. Nomsa owes zero CGT. This is the scenario for most South African homeowners — the R3M exclusion covers the majority of residential property gains in all but the most expensive nodes.
Primary residence — gain above R3M exclusion. CGT on the excess.
Thabo bought his Cape Town home in 2008 for R1,800,000. He sells in 2026 for R9,500,000. Base cost is R1,800,000 plus R45,000 transfer duty, R20,000 conveyancing, and R650,000 in pool, garden landscaping, and home office improvements = R2,515,000. Agent commission on sale: R285,000. He has no other capital gains this year. His marginal income tax rate is 41%.
Thabo's gain of R6,700,000 exceeds the R3,000,000 primary residence exclusion by R3,700,000. After the R50,000 annual exclusion and the 40% inclusion rate, his actual CGT bill is R60,270 — an effective rate of only 0.9% on a R6.7M gain. This is the power of the inclusion rate mechanism for individuals.
Listed shares — capital gain partly offset by a capital loss from another stock
Sipho is a 45-year-old investor. In the 2026/27 tax year he sells two positions: Naspers shares bought for R280,000 (including brokerage) and sold for R590,000 — a gain of R310,000. He also sells a failed mining junior bought for R120,000 and sold for R35,000 — a loss of R85,000. No other capital events. His marginal income tax rate is 36%.
The capital loss on the mining stock directly offsets the gain on the Naspers sale. The R50,000 annual exclusion then removes another R50,000 from the aggregate net gain, leaving a net taxable gain of just R175,000 before inclusion. CGT payable is R25,200 — on a gross gain of R310,000.
Death deemed disposal — executor's CGT calculation on investment property
Nompumelelo dies on 15 August 2026. At the time of her death she holds an investment flat in Sandton. She bought it in 2009 for R850,000 (all-in base cost including improvements over the years: R1,150,000). Market value at date of death: R3,400,000. She also holds listed unit trusts worth R950,000 with a base cost of R620,000. Her other taxable income for the year of death (salary to August) was R480,000 — marginal rate on the CGT included amount will be 41%. The executor must calculate and report the CGT on her final ITR12.
The year-of-death exclusion of R440,000 significantly reduces the CGT burden versus the standard R50,000 exclusion. The flat does not qualify as a primary residence (investment property) — no R3M exclusion applies.
Small business disposal — age 55+, R2.7M exclusion reduces CGT to near-zero
James is 58 years old and sells his printing business (operated as a sole proprietorship) after 12 years. Total proceeds from the disposal of all business assets (equipment, goodwill, stock) are R8,200,000. Base cost of all qualifying capital assets is R3,100,000. Market value of total business assets at disposal: R8,200,000 — below the R15,000,000 threshold. James has not previously claimed the small business exclusion. No capital losses. His marginal rate on the included amount will be 45%.
The combination of the R2,700,000 small business exclusion and the R50,000 annual exclusion reduces a R5,100,000 capital gain to a net taxable gain of R2,350,000. With the 40% inclusion rate, James pays CGT on R940,000 — an effective rate of 8.2% on a R5.1M gain.
QUICK REFERENCE
CGT by taxpayer type — effective rates and exclusions at a glance
| Taxpayer type | Inclusion rate | Income tax rate | Max effective CGT | Annual exclusion | Primary residence | Small business |
|---|---|---|---|---|---|---|
| Individual (under 65) | 40% | 18%–45% | 18% | R50,000 | R3,000,000 | R2,700,000 (55+) |
| Individual (65+) | 40% | 18%–45% | 18% | R50,000 | R3,000,000 | R2,700,000 |
| Year of death | 40% | 18%–45% | 18% | R440,000 | R3,000,000 | R2,700,000 |
| Special trust | 40% | 18%–45% | 18% | R50,000 | R3,000,000 | None |
| Company | 80% | 27% | 21.6% | None | None (general) | None |
| Trust (other) | 80% | 45% | 36% | None | R3,000,000 (primary) | None |
| Source: Eighth Schedule — Income Tax Act 58/1962 · SARS Budget 2026/27 Tax Pocket Guide · All figures 2026/27 year of assessment | ||||||
COMMON MISTAKES
Six CGT errors South African taxpayers and practitioners make
Not establishing base cost for pre-October 2001 assets
The most expensive CGT error in South Africa. A homeowner who bought their property in 1995 for R180,000, sold it in 2026 for R3,800,000, and has a gain above the R3M primary residence exclusion will calculate CGT on R620,000. But if they had a market valuation done for October 2001 showing the property was worth R800,000 at that date, their CGT is calculated only on the gain since 2001 — potentially eliminating the excess entirely. Without the valuation date election, the entire post-1995 gain is used. Retrospective 2001 valuations are still accepted by SARS and can be prepared by registered valuers using historical sales data.
Paragraph 29 — Eighth Schedule, pre-CGT valuation dateForgetting to include capital improvements in base cost
Every capital improvement to a property — extensions, renovations, additions — qualifies as base cost and reduces the taxable gain. Taxpayers who have owned a property for 15 years and spent R800,000 on improvements frequently fail to document and claim these costs because they have no single invoice for the total. The correct approach is to maintain a running file of all capital expenditure on the property from acquisition date. Even partial documentation is better than nothing — and the amount compounds significantly over a long holding period.
Paragraph 20 — Eighth Schedule, base cost additionsClaiming the primary residence exclusion on a property used partly for business
A homeowner who claims a home office deduction under Section 11(a) of the Income Tax Act — deducting a percentage of home expenses against business income — has implicitly allocated part of the property to business use. When the property is sold, SARS apportions the primary residence exclusion to exclude the business portion. A homeowner who claimed 20% home office for 10 years faces a proportional reduction in the primary residence exclusion on sale. The higher the home office claim and the longer it was claimed, the larger the CGT exposure on sale.
Paragraph 46 — Eighth Schedule, apportionment of primary residence exclusionIgnoring the deemed disposal on death when planning estates
Estate planners who focus only on estate duty (20% above R3.5M) frequently overlook CGT. On death, every capital asset is deemed disposed of at market value — triggering CGT on all unrealised gains in the estate. A deceased with an investment property portfolio worth R8,000,000 (base cost R2,000,000) and a share portfolio with R1,200,000 unrealised gain owes income tax on CGT included amounts in the final ITR12 before estate duty is even calculated. In large estates, CGT on deemed disposal can exceed R500,000 — money the executor must source from the estate's liquid assets.
Paragraph 40 — Eighth Schedule, deemed disposal on deathNot claiming the small business exclusion at age 55
The R2,700,000 small business exclusion is a once-in-a-lifetime benefit that many qualifying South African business owners never claim — either because they are unaware of it, or because their adviser does not check the qualifying conditions at the time of disposal. The exclusion requires the disposal to be a qualifying event (sale, retirement, death, or incapacity) and all other conditions to be met at the time of disposal. It cannot be claimed retroactively. Business owners who are approaching a disposal event and will be 55 or older should verify qualification proactively — not after the disposal has been completed.
Paragraph 57 — Eighth Schedule, small business exclusionNot including capital gains in provisional tax estimates
A taxpayer who sells an investment property for a R2,000,000 gain in November of a tax year must include the CGT included amount (R2,000,000 × 40% = R800,000) in their second provisional tax return due in February. Failure to do so results in a shortfall on the second provisional payment, and if the final assessment exceeds the second provisional payment by more than 20% of the final liability (or R50,000), a 20% underestimation penalty applies. Property sellers who are also provisional taxpayers must plan their February IRP6 submission to include the anticipated CGT.
Fourth Schedule — IRP6 provisional tax, paragraph 19FREQUENTLY ASKED QUESTIONS
Capital gains tax — questions South Africans ask
What is the capital gains tax rate in South Africa for 2026/27?
South Africa does not tax the full capital gain as income. Only a portion — the included amount — is added to taxable income and taxed at the marginal rate. For individuals and special trusts, the inclusion rate is 40%, producing a maximum effective CGT rate of 18% (40% × 45% top marginal rate). For companies, the inclusion rate is 80%, producing a maximum effective rate of 21.6% (80% × 27%). For trusts other than special trusts, the 80% inclusion rate and 45% trust rate combine to a maximum effective rate of 36%. These rates apply for the 2026/27 year of assessment. Source: SARS Budget 2026/27 Tax Pocket Guide, Eighth Schedule to the Income Tax Act 58 of 1962.
What is the primary residence exclusion for CGT in South Africa?
The primary residence exclusion under paragraph 44 of the Eighth Schedule exempts the first R3,000,000 of capital gain on the disposal of a qualifying primary residence. If the gain is R3,000,000 or less, no CGT is payable. If the gain exceeds R3,000,000, only the excess is included in the CGT calculation. The exclusion applies only to a property ordinarily used as the taxpayer's main home. Holiday homes, investment properties, and properties partly rented out do not qualify for the full exclusion. The exclusion must be apportioned if the property was partly used for business purposes.
What is the annual CGT exclusion in South Africa?
The annual capital gains exclusion for individuals and special trusts is R50,000 per year of assessment under paragraph 5 of the Eighth Schedule. The first R50,000 of net capital gains in a tax year (after the primary residence exclusion) is excluded from CGT. In the year of a taxpayer's death, the annual exclusion increases to R440,000. Companies and trusts other than special trusts do not qualify for the annual exclusion. The R50,000 annual exclusion is not inflation-adjusted and has remained at this level for several years.
How does CGT work when you sell a house in South Africa?
CGT on a primary residence sale: (1) Calculate gain = net selling price minus base cost (purchase price plus transfer costs plus capital improvements plus selling agent commission); (2) Apply the R3,000,000 primary residence exclusion — if the gain is R3M or less, CGT is zero; (3) Apply the R50,000 annual exclusion to any remaining gain; (4) Multiply the net gain by 40% (inclusion rate); (5) The included amount is added to taxable income and taxed at the marginal income tax rate. Most South African homeowners whose primary residence gain is below R3,000,000 owe zero CGT.
What happens to CGT when someone dies in South Africa?
Under paragraph 40 of the Eighth Schedule, a taxpayer is deemed to have disposed of all assets at market value on the date of death. This triggers CGT on all unrealised gains. The annual exclusion increases to R440,000 in the year of death. The primary residence exclusion of R3,000,000 still applies to the deceased's primary residence. CGT forms part of the deceased's final ITR12, filed by the executor. Beneficiaries who inherit assets receive them at market value as their new base cost.
How is CGT calculated on shares in South Africa?
CGT on shares: capital gain = selling proceeds minus base cost (purchase price plus brokerage fees plus STT). No primary residence exclusion applies. The R50,000 annual exclusion applies for individuals. The net gain is multiplied by the 40% inclusion rate (individuals), and the included amount is added to taxable income. Shares held inside a retirement annuity, pension, or provident fund are excluded — CGT applies only to shares held outside retirement funds. Shares in a tax-free savings account (TFSA) are fully excluded from CGT.
What is the base cost of an asset for CGT purposes in South Africa?
Base cost is the deductible amount in the CGT calculation. For assets acquired after 1 October 2001: actual acquisition cost plus transfer costs, brokerage, and capital improvements. For pre-CGT assets (acquired before 1 October 2001): one of three valuation methods applies — market value on 1 October 2001, the time-apportionment base cost, or 20% of proceeds. Taxpayers may elect whichever method produces the highest base cost (lowest gain). Retrospective October 2001 valuations are accepted by SARS.
Does CGT apply to the sale of a business in South Africa?
Yes, CGT applies to business asset disposals. Individual taxpayers aged 55 or older disposing of a qualifying small business where assets do not exceed R15,000,000 in market value may claim the R2,700,000 small business exclusion under paragraph 57 of the Eighth Schedule — once per lifetime. The business must have been conducted for at least five of the preceding ten years. This exclusion is applied before the annual exclusion and can significantly reduce the CGT on a business sale.
Can you offset a capital loss against a capital gain in South Africa?
Yes. Capital losses offset capital gains in the same year. Net capital losses carry forward indefinitely to offset future capital gains — they cannot offset ordinary income. Losses on personal-use assets are disregarded. Losses on primary residences within the R3,000,000 exclusion band are also disregarded. Only net capital gains (gains minus losses) are included in taxable income via the inclusion rate and taxed.
What are CGT exclusions and exemptions in South Africa?
Key CGT exclusions: (1) Annual exclusion R50,000 for individuals (R440,000 on death); (2) Primary residence exclusion R3,000,000; (3) Small business exclusion R2,700,000 (age 55+, market value ≤ R15M); (4) Personal-use assets — vehicles, jewellery, art for personal use; (5) Retirement fund assets held inside the fund; (6) Tax-free savings accounts (TFSA); (7) Life insurance proceeds on death; (8) Gambling winnings. Each exclusion has specific qualifying conditions. All exclusions are under the Eighth Schedule to the Income Tax Act 58 of 1962.
RELATED TOOLS & GUIDES
CGT Calculator
Calculate CGT for individuals, companies, and trusts — with all exclusions applied. Enter proceeds, base cost, taxpayer type, and asset class for an instant estimate.
Eighth Schedule · Income Tax Act 58/1962
Open →Income Tax Calculator
Once you have the CGT included amount, add it to other taxable income to determine the total tax liability and marginal rate impact.
Income Tax Act 58/1962 — s6
Open →PAYE Calculation Guide
How CGT fits into the broader income tax picture — and why property sellers must update their provisional tax IRP6 to include anticipated capital gains.
Learn · Personal Tax
Open →Wandile Lokwe
FAIS Key Individual · CenturionAI (Pty) Ltd · Centurion, Gauteng
20 years in South African financial services. Founder of CenturionAI (Pty) Ltd — the SA Professional Financial Services MCP Server, LeadRevive, FinPlan AI, and SmartDoc AI. All CGT figures on this page are verified against the SARS Budget 2026/27 Tax Pocket Guide and the Eighth Schedule to the Income Tax Act 58 of 1962. CGT is rated a HIGH disclaimer tier on this platform — base cost establishment, primary residence apportionment, and small business exclusion qualification require professional verification before relying on any CGT estimate.
wandile@centurionai.co.za · 081 344 8722
CGT is calculated under the Eighth Schedule to the Income Tax Act 58 of 1962. This page is a HIGH-tier reference — CGT calculations depend on accurately establishing the base cost of each asset, which may require a professional valuation for pre-CGT assets (acquired before 1 October 2001) or assets with complex improvement histories. The primary residence exclusion may be apportioned if the property was not exclusively used as a primary residence, including where a home office deduction has been claimed. The small business exclusion requires professional confirmation of all qualifying conditions under paragraph 57 of the Eighth Schedule. Worked examples on this page are illustrative — actual CGT liability depends on each taxpayer's specific asset history, elections made, and prior-year capital losses. A registered tax practitioner must prepare the CGT schedule (IT3b or Annexure T on the ITR12) and verify the final CGT liability before submission. Do not act on any figure on this page without professional verification.