Primary residence CGT exemption jumps to R3 million

• The primary residence CGT exclusion has increased from R2 million to R3 million, reducing taxable gains for many homeowners.

• Sellers can now retain significantly more equity, especially in growth suburbs where long-term price appreciation pushed gains above the old threshold.

• The change is expected to unlock more housing mobility as homeowners reconsider selling, downsizing, or relocating.

Budget boost for homeowners

‍South Africa’s 2026 National Budget has delivered a meaningful tax break for homeowners selling their primary residence.

Effective 1 March 2026, the capital gains tax (CGT) exclusion on primary residences increases from R2 million to R3 million, according to revised tax tables published by SARS on 26 February.

The change means that the first R3 million of profit made on the sale of a primary home is now exempt from capital gains tax. Only gains above this threshold will be subject to tax.

For many homeowners who have owned their properties for years,  particularly in areas where prices have steadily appreciated, the adjustment materially improves the net proceeds they will receive when selling.

‍

“This is not R3 million of the selling price, it’s R3 million of the capital gain,” explains Paul Stevens.

‍

“For many sellers, that difference translates directly into more money in their pockets when the transaction is complete.”

‍

The increased exclusion effectively gives homeowners an additional R1 million buffer before CGT applies, a change that could influence selling decisions across the residential market.

What sellers will save

To understand the impact, it helps to compare real-world scenarios under the old and new thresholds.

Scenario 1: A family home in a growth suburb

• Bought in 2012: R1.8 million

• Sold in 2026: R4.5 million

• Capital gain: R2.7 million

Under the previous R2 million exclusion

• R700 000 of the gain was taxable, resulting in roughly R86 800 in CGT.

Under the new R3 million exclusion

• The entire gain falls within the exemption.

• CGT payable: R0

In this case, the family keeps nearly R90 000 more of their profit.

Scenario 2: A long term owner in a high-value suburb

• Bought in 2005: R2.5 million

• Sold in 2026: R7.8 million

• Capital gain: R5.3 million

Before the increase

• R3.3 million taxable (about R475 200 CGT)

Now

• R2.3 million taxable (about R331 200 CGT)

• Estimated saving: ±R144 000

For homeowners in strong-performing suburbs, the tax relief becomes even more substantial.

Scenario 3: A retiree downsizing after decades

• Bought in 1998: R950 000

• Sold in 2026: R3.9 million

• Capital gain: R2.95 million

Before the increase

• R950 000 taxable (roughly R98 800 CGT)

Now

• Entire gain exempt.

• CGT payable: R0

For retirees unlocking the equity in long-held homes, this change could mean nearly R100 000 more preserved wealth.

Why this matters in 2026

Over the past decade, residential property values in many South African suburbs have steadily climbed. As a result, a growing number of homeowners were beginning to exceed the old R2 million CGT exclusion, even on relatively modest homes.

The increase to R3 million reflects this reality and helps prevent ordinary homeowners from being penalised simply because property prices have risen over time.

According to Stevens, the adjustment could influence the housing market in several ways.

• First, it may encourage more homeowners to enter the market, particularly those who delayed selling because of potential tax implications.

• Second, it improves financial certainty for sellers, allowing them to calculate their post-sale proceeds with greater confidence.

• Third, it benefits long-term homeowners and retirees, who often rely on the equity in their homes to fund retirement or lifestyle changes.

• Finally, the additional retained capital provides greater flexibility for the next step, whether that involves downsizing, relocating, or reinvesting.

‍

“The biggest mistake sellers make is focusing only on the selling price,” Stevens says.

‍

“What ultimately matters is the net figure, what you walk away with after costs and tax. Under the new R3 million exclusion, that number has just improved significantly.”

‍

A welcome shift for homeowners

In a property market where every rand of equity counts, the increase in the primary residence CGT exclusion represents a practical and timely adjustment.

By lifting the threshold to R3 million, government has effectively recognised the impact of long-term property price growth while giving homeowners greater financial breathing room.

For many South Africans contemplating a sale, whether to upgrade, downsize, or relocate, the message is clear: the numbers have just become more favourable.

‍