CGT in plain English

South African Capital Gains Tax for individuals: 40% inclusion, the R50 000 annual exclusion, the R2m primary-residence exemption, and what really gets taxed.

Updated By the ZACalc team

CGT isn't its own tax

When you sell an asset for more than you paid, the profit is a "capital gain". A portion of that gain is added to your taxable income for the year and taxed at your marginal rate. So CGT is really just income tax on a slice of your gain.

The four-step calculation

  1. Total gain = proceeds − base cost (purchase price + qualifying improvements + costs).
  2. Subtract the annual exclusion (R 50 000 per individual per year).
  3. Apply the inclusion rate of 40% for individuals.
  4. Add the included amount to your taxable income — it's taxed at your marginal rate.

The big exemption: your home

If the asset is your primary residence, the first R 2 000 000 of gain is exempt. Most South Africans never pay CGT on selling their family home. The exemption only applies to the portion you used as a primary residence — if you rented it out for part of the period, that share is taxable.

Effective CGT rate

Because only 40% is included, the effective CGT rate is your marginal rate × 40%. For a top-bracket earner (45%), that's 18%. For someone in the 26% bracket, it's about 10.4%.

Worked example

You sell shares for R 350 000 that you bought for R 200 000. Gain = R 150 000. After the R 50 000 exclusion: R 100 000. Included at 40% = R 40 000 added to taxable income. If your marginal rate is 31%, the tax on this disposal is R 12 400.

Things that aren't taxed

  • Personal-use assets (your car, household furniture).
  • Retirement-fund lump sums (taxed under separate retirement tables).
  • Tax-free Savings Account growth.
  • Compensation for personal injury or illness.