What capital gains tax actually taxes
Capital gains tax South Africa applies when you sell, donate, or otherwise dispose of an asset for more than it cost you. You don’t pay tax on the whole profit. SARS only taxes a portion of it, called the inclusion rate, and several exclusions can wipe out the gain entirely before that calculation even starts.
Not all assets attract CGT and certain capital gains and losses are disregarded. A resident is liable for CGT on assets located both in and outside South Africa. A non-resident is liable to CGT only on immovable property in South Africa or assets of a “permanent establishment” in South Africa. CGT isn’t a separate tax return. It forms part of your normal income tax assessment: you declare the gain, apply the exclusions, and the taxable portion gets added to your taxable income for the year.
The inclusion rate: how much of your gain gets taxed
The inclusion rate decides what slice of your net capital gain is added to taxable income. The Budget on 25 February 2026 made no changes in percentages, only changes to exclusions. That means the long-standing rates carry over into the 2026/27 tax year: individuals and special trusts include 40% of a net capital gain in taxable income, while a body corporate, a share block company and an association of persons have an inclusion rate of 80%, meaning 80% of a capital gain will be included in the taxable income of a company. Other trusts also use the 80% rate.
Because the inclusion rate is applied before your normal tax rate, the effective CGT rate is always lower than your income tax rate. Maximum effective CGT rates are 18% for individuals and special trusts, 21.6% for companies, and 36% for other trusts.
| Taxpayer | Inclusion rate | Maximum effective CGT rate |
|---|---|---|
| Individuals and special trusts | 40% | 18% |
| Companies | 80% | 21.6% |
| Other trusts | 80% | 36% |
Your actual effective rate depends on your marginal income tax rate, so most individuals pay well below the 18% ceiling.
The exclusions that cut your bill
This is where Budget 2026 made real changes. The rand values below apply from the 2026/27 tax year.
An annual exclusion of R50 000 capital gain or capital loss is granted to individuals and special trusts. This is the first slice of any gain in a tax year, and it applies automatically before anything else. The purpose of the annual exclusion is to reduce compliance costs and simplify the administration of the tax by keeping small gains and losses out of the system.
Sell your main home and the first big chunk of the gain disappears too. A gain or loss of up to R3 000 000 on the disposal of a primary residence is excluded. If you own the home jointly with a spouse, the exclusion is split according to each person’s share, so a couple with an equal interest each get half the amount against their own portion of the gain.
Selling a small business in retirement gets the biggest boost of all. A small business exclusion of R2.7 million applies to individuals who are at least 55 years old when a small business with a market value not exceeding R15 million is disposed of. Both figures were increased in the 2026 Budget: the small business disposal exclusion rose from R1.8 million, and the market-value ceiling rose from R10 million.
Dying doesn’t dodge CGT, but the exclusion is far bigger in the year you go. The exclusion granted to individuals is increased to R440 000 for the year of death.
| Exclusion | Amount from 2026/27 | Who qualifies |
|---|---|---|
| Annual exclusion | R50 000 | Individuals and special trusts, every tax year |
| Primary residence | R3 000 000 | Gain or loss on your main home |
| Small business disposal | R2.7 million | Individuals 55+, business market value up to R15 million |
| Year of death | R440 000 | Replaces the annual exclusion in the year you die |
Gains and assets that fall away completely
Some disposals never enter the CGT system at all, regardless of size. A capital gain or loss determined in respect of the disposal of a personal-use asset of a natural person or a special trust must be disregarded. That covers most household possessions, cars used privately, and similar items.
Other common exclusions include compensation for personal injury or illness, a donation or bequest of an asset to an approved public benefit organisation, and returns inside a tax-free investment account under section 12T. Disposals of at least a 10% interest in a foreign company also qualify for relief under specified conditions.
Who has to declare it, and when
There’s no separate CGT registration. You work the gain out and declare it on your normal income tax return for the year the disposal happened. For property specifically, the timing rule matters: the CGT liability arises when you sign the sale agreement, not when the transfer registers at the Deeds Office. Signing a sale agreement in February 2026 puts the gain in the 2025/26 tax year, even if transfer only happens in May 2026, so plan sale timing accordingly.
If your total gains for the year are within your annual exclusion and you have no other reason to submit a return, you generally don’t need to report the disposal at all. Once gains exceed the exclusion, they go into your ITR12 alongside your other income.
Where to check the current figures
Exclusions and inclusion rates can move at each Budget, and property or business sales are exactly the kind of decision where an outdated number costs you real money. Before you sell an asset, check the SARS Capital Gains Tax pages directly, or consult a registered tax practitioner if the disposal involves a business, a trust, or property held jointly. For the exclusions, the effective rates table, and any further Budget updates, go to sars.gov.za.
