Capital gains tax is not a separate tax
The first thing to understand is that there is no standalone CGT rate. A portion of your capital gain is added to your taxable income for the year and taxed at your normal marginal rate, alongside your salary. There is also no separate CGT registration: you declare gains and losses on your annual income tax return.
That portion is the inclusion rate, and for individuals it is 40%. So if you make a R100,000 gain, R40,000 of it is added to your taxable income. What you actually pay depends on which bracket that R40,000 lands in.
Because the top marginal rate is 45%, the most anyone can pay on a capital gain is 40% of 45%, which is 18%. Someone in the 26% bracket pays an effective 10.4%. Someone in the lowest bracket pays 7.2%. It is one of the lighter taxes in the system, which is why the distinction between a capital gain and ordinary income matters so much.
The exclusions did change, so check which year you sold in
Before any of that maths runs, several exclusions apply. The 2026 Budget raised two of them, but only for disposals from 1 March 2026, which is the start of the 2027 tax year. That matters right now, because the return most people are filing at the moment covers the year to 28 February 2026, and the older figures still apply to it.
- Annual exclusion: R40,000 for the 2026 tax year (1 March 2025 to 28 February 2026), and R50,000 for the 2027 tax year (1 March 2026 to 28 February 2027). It applies to the net result of all your gains and losses for the year, and any unused part cannot be carried forward.
- Primary residence exclusion: R2 million of the gain or loss on your main home for the older year, and R3 million where the sale agreement became unconditional on or after 1 March 2026. The increase was announced in the February 2026 Budget and is being applied from that date while Parliament makes it permanent, so confirm the timing of your contract before you rely on it.
- Year of death: the annual exclusion rises on death, from R300,000 to R440,000 from 1 March 2026.
- Small business exclusion: if you are 55 or older and sell a small business worth no more than R15 million that you have held for at least five years, up to R2.7 million of the gain over your lifetime is disregarded.
- Personal use assets are excluded entirely: your car (even if you receive a car allowance), furniture, appliances and similar belongings. It also means you cannot claim the loss when you sell your car for less than you paid, which is the usual outcome. Shares, funds, property and cryptocurrency are never personal use assets.
Between the annual exclusion and the primary residence exclusion, a very large share of ordinary South African disposals produce no CGT at all. Gains inside a tax-free savings account, and lump sums paid from approved retirement funds, are outside CGT altogether.
To see the effect, take a R200,000 gain on shares sold after 1 March 2026. Subtract the R50,000 annual exclusion and R150,000 is left. Multiply by 40% and R60,000 is added to your taxable income. If all of it lands in the 36% bracket, the tax is R21,600, an effective 10.8% on the full gain.
Base cost is where people lose money
Your gain is the proceeds minus the base cost. Most people know what they sold something for. Far fewer can prove what it cost them, and an unprovable base cost means a larger taxable gain.
Base cost is not only the purchase price. It includes the costs of acquiring and disposing of the asset, and for property that is a meaningful list: transfer duty, conveyancing fees, estate agent commission on the sale, and the cost of improvements. A repair is not an improvement. Fixing a leak does not add to base cost. Adding a room does. Our guide to tax on rental income covers the same repair-versus-improvement line from the landlord's side.
Shares and unit trusts work differently, and this is where many people go wrong. If you bought the same fund every month for eight years, your base cost is not the sum of every purchase. It is the cost of the units you actually sold. SARS lets you work that out in one of three ways: specific identification, first-in-first-out, or the weighted average method, which is available for listed shares and units in a unit trust. If you choose weighted average, you apply it consistently to that class of identical assets until you have disposed of all of them.
Here is what that looks like. You buy R10,000 of a fund at R10 a unit (1,000 units), and later R10,000 at R20 a unit (500 units). You sell 500 units at R30, for R15,000:
- First-in-first-out: the units you sold are treated as the oldest ones, which cost R5,000, so the gain is R10,000.
- Weighted average: your 1,500 units cost R20,000 in total, about R13.33 each, so the 500 you sold cost about R6,667 and the gain is about R8,333.
- Specific identification: if you can show you sold the R20 units, they cost R10,000 and the gain is R5,000.
Same sale, three legitimate answers. The point is not to hunt for the lowest number but to pick the method deliberately, apply it consistently, and keep the contract notes and statements that support it.
What actually triggers it
CGT is triggered by a disposal, which is broader than a sale. SARS lists selling, donating, losing or destroying an asset, a change in how you use it, ceasing to be a South African tax resident and dying as disposal events. What does not trigger it is a gain on paper. An investment that has doubled costs you nothing in tax until you sell it, which is one of the quiet advantages of leaving a long-term holding alone.
The disposals people forget
Most people associate capital gains tax with selling a house or a share portfolio. Several other events count as disposals and catch people unprepared.
- Switching between funds. Moving from one unit trust to another is a disposal of the first, even though no money reaches your bank account. A portfolio rebalanced every year outside a tax-free account can generate a gain every year.
- Donating an asset. A donation is a disposal at market value, so you can trigger a gain on something you gave away and received nothing for. Donations tax may apply on top, separately. Transfers between spouses are the exception: the spouse giving up the asset disregards the gain or loss, and the spouse receiving it takes over its history and base cost.
- Ceasing to be a South African tax resident. This triggers a deemed disposal of your worldwide assets at market value, often called exit tax. It is about tax residency, not simply moving abroad. Immovable property in South Africa is excluded, but investments generally are not. Our guide to investing offshore covers the related exchange control rules.
- Death. A deemed disposal at market value, with the higher annual exclusion for that year and a rollover for anything left to a spouse. Our guide to wills and estate duty shows how this fits with the rest of an estate.
- Crypto assets. Selling, swapping or spending them is a disposal. Whether a particular gain is capital or revenue in nature depends on how you were trading.
The common thread is that a disposal does not require cash to change hands. If ownership moved, check whether it counted.
Quick answers
What is the maximum capital gains tax I can pay?
An effective 18%, which is 40% of the top 45% marginal rate. If you are not in the top bracket, your effective rate is lower: roughly 10.4% in the 26% bracket and 7.2% in the lowest.
Do I pay CGT when I sell my house?
Usually not. The first R3 million of the gain on a primary residence is excluded where the sale became unconditional from 1 March 2026, and R2 million before that. The exclusion applies to the gain, not the selling price, so a home bought for R1.2 million and sold for R2.8 million produces a R1.6 million gain that falls entirely inside it. It only covers a home owned by an individual or special trust that you live in and use mainly for domestic purposes, up to two hectares, and not any part used for trade. If a couple owns the home jointly, the exclusion is split by their shares.
Can I use a capital loss?
Yes. Losses are set off against gains in the same year, and any remaining net loss is carried forward to future years. It cannot be set off against your salary.
Which return do my gains go on?
The one for the tax year you sold in. A sale between 1 March 2025 and 28 February 2026 belongs on the return that closes on 23 October 2026 for non-provisional taxpayers. Our auto-assessment guide explains what to do if SARS has already assessed you without the sale.
The record you will wish you had kept
The single most useful thing you can do about capital gains tax is unglamorous: write down what you paid for something, and when. Base cost disputes are lost on missing paperwork rather than on the law, and the gap between buying and selling is often a decade. If your holdings are index funds bought monthly, our guide to ETFs explains why the record-keeping matters more than it does for a single purchase.
Budget Hub's investments hub records a purchase value, a purchase date and a current value for each holding, which are the numbers a gain calculation starts from. It is a useful running record for lump-sum purchases and for seeing where you stand, but it is not tax software and it does not replace the contract notes and tax certificates your platform issues. Keep those as your proof of base cost, and note that the free plan tracks up to three investments, so a long history of monthly purchases belongs in your platform statements.