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Calculating Estate Duty on Your Primary Residence

Last Updated for the 2026/2027 Tax Year

Key Takeaways for Single Homeowners

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For many single South Africans—whether unmarried, divorced, or widowed—a primary residence is the largest asset they own. Without a spouse to inherit the property tax-free, single homeowners must carefully consider how the value of their property will impact their heirs.

The R3.5 Million Basic Deduction Explained

The good news is that owning a house does not automatically mean your estate will owe SARS money. Under Section 4A of the Estate Duty Act, every individual is entitled to a standard tax-free threshold of R3.5 million.

Estate duty—which is levied at a flat rate of 20% (up to R30 million)—is only calculated on the "dutiable estate" that exceeds this R3.5 million mark.

Scenario 1: A Fully Paid-Off R4.5 Million Home

The Situation: David is divorced. He passes away and leaves a fully paid-off house valued at R4,500,000 to his adult daughter. He has R100,000 in personal debt.

Step 1: The Gross Value of the Estate

David's primary residence is valued at market price.
Gross Estate = R 4,500,000

Step 2: Subtracting Liabilities and Fees

Before tax is calculated, the estate must settle its debts and Executor's fees (max 3.5% + 15% VAT on gross assets).

R 4,500,000 - R 100,000 (Debt) - R 181,125 (Executor Fee) = R 4,218,875 (Net Estate)

Step 3: Applying the Section 4A Abatement

We now deduct David's basic R3.5 million tax-free allowance from his Net Estate.

R 4,218,875 - R 3,500,000 = R 718,875 (Dutiable Estate)

The Verdict: Estate Duty is 20% of R 718,875.
SARS Liability: R 143,775

Scenario 2: The Bonded Property

The Situation: Let's look at David again. His house is still worth R4,500,000, but this time, he still owes the bank R2,000,000 on his mortgage bond.

The Calculation

An outstanding bond is a liability that heavily reduces the Net Estate.

Gross Estate (R4.5m) - Bond Liability (R2m) - Executor Fees (R181k) = R 2,318,875 Net Estate.

Because the Net Estate (R2.3m) is below the R3.5 million threshold, David's estate owes R 0.00 in Estate Duty.

Note: While no estate duty is owed, the estate still needs cash to pay the Executor and settle the R2m bond with the bank!

The Liquidity Trap: How Will Heirs Pay?

In Scenario 1 above, David's estate owes SARS R 143,775 and the Executor R 181,125. That is a total cash requirement of R 324,900.

If David’s only asset is the house, the estate is "asset rich, but cash poor." To pay these legal and tax bills, the Executor may be forced to sell the family home, completely defeating David's intention of leaving the house to his daughter.

Pro Tip: Solving the Liquidity Shortfall A standard estate planning strategy is to take out a life insurance policy made payable to the estate (not a direct beneficiary). This provides the Executor with immediate cash to settle the estate duty, Master's fees, and Executor fees, ensuring the primary residence can be safely transferred to your heirs without being forcibly sold.
This guide is provided for educational purposes by the team at Cape Town Lawyer. For personalized legal advice regarding wills, property transfers, and estate administration in South Africa, please consult with a qualified legal professional.

Calculate Your Own Scenario

Curious what the numbers look like for your specific property value, bonds, and debts? Use our free 2026 Estate Duty Calculator to run a personalized breakdown.

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