Understanding the New R3 Million Primary Residence Tax Exclusion

April 20, 2026 / Kings

Agents and many sellers are about to benefit from the new tax exemption law. Under this law, homeowners selling their properties may pay less Capital Gains Tax (CGT) than expected, provided the sale agreement became unconditional and enforceable on or after 1 March 2026. Although this law has taken effect, many sellers and agents may not yet be aware of the threshold change or how to take advantage of it, as it was not included in the promulgated tax laws that took effect on 1 April 2026. The change took effect from the Minister’s announcement date (1 March 2026) under paragraph 45(1A) of the Eighth Schedule to the Income Tax Act.

Background

Previously, the first R2 million of profit (capital gain) from the sale of a primary residence was tax-free. However, the 2026 budget increased the Capital Gains Tax (CGT) exclusion for primary residences from R2 million to R3 million.

What the R3 Million Exclusion Means for Agents and Sellers

Going forward, property sales concluded on or after 1 March 2026 will qualify for the new exclusion, meaning the first R3 million of profit (capital gain) on the sale is tax-free.

Properties sold before 1 March 2026, even if payment is made later, will not benefit from the higher exclusion.

In simple terms, the legally binding date of the unconditional sale is what matters—not the payment date or the date of transfer registration.

Example:
If a seller makes a R2.5 million profit:

• If the sale became binding before 1 March 2026, under the old R2 million exclusion, R500,000 is taxable.
• If the sale became binding on or after 1 March 2026, under the new R3 million exclusion, no CGT is payable on the R2.5 million.

What Agents and Sellers Should Do

With this new law, sellers, agents, and advisors should carefully review their sale agreements to determine the exact date the contract became unconditional (for example, when a mortgage approval condition was fulfilled). This ensures they receive the correct tax benefit.

Agents who verify the unconditional date can advise sellers accurately and potentially save them significant tax.

The specific wording of the agreement can also influence the tax outcome, so attention to detail is essential.