Sale of Buildings in South Africa

Upon disposal of a property the Income Tax Act No.58 of 1962 Section 8(4) requires that where an asset is sold for a figure in excess of its tax value, wear & tear allowances previously claimed are to be recouped.  The recoupment will equal the sale price less the tax value, however, the recoupment cannot exceed the value of the deductions previously claimed.

Case law suggests that the sale of land and buildings are the sale of one asset, and therefore if a property is sold at a price exceeding the sellers purchase price, any allowances previously given will be fully recouped.  Additionally, apportionments made to reduce potential recoupment of allowances are not justified, unless such apportionment is stated in a contract of sale and agreed by both parties.

From a tax perspective, it is therefore beneficial for the seller to apportion the purchase price within the sale agreement to the relevant asset classes.  The revenue authorities, without such an apportionment are entitled to apply a reasonable value to the assets sold in determining the recoupment.

In order to suffer no recoupment the sale agreement should therefore apportion the purchase price as follows:-

From a tax paying purchaser’s perspective the apportionment to qualifying fixed assets should be as high as possible, as they will be entitled to allowances on that portion.  It is therefore important during the negotiation process to identify whether a claim has been made, and which of the parties are likely to gain the most benefit from the available allowances.

Prior to disposal of any properties, it is suggested that you contact PJB in order that the recoupment provisions of the Income Tax Act are addressed, and potential recoupment is kept to a minimum.


The information contained in our website is believed to be correct, but there may be errors or omissions for which PJB cannot be responsible. It is therefore essential to take advice on specific issues.


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Purchase Price

This is the original or anticipated purchase price or development cost of your property.

Do not enter the current value here.

Building Type

Please provide the type of building you are looking to claim allowances on.

Note: You will be able to add further information about the type of building in the next step.

Your options here are;

  • Office.
  • Retail: Including high street, shopping centres and retail warehouses.
  • Mixed Use.
  • Industrial: Including warehouses and distribution centres.
  • Other: Leisure, hotels, casinos etc.
Building Category

Please select the description that best suits your property.

Other Information

Please provide any additional information about your property that you may consider appropriate.

Floor Area

Please enter the total floor area of the property.
You can provide either square footage or metres, but only use figures here.
The floor area you specify can either be gross or net internal space.

Floor Area Units

Please select the type of area e.g. Metres or Feet
and if the measurement has been taken as net or gross internal space.

Date of Purchase

Please enter the approximate month and year of purchase, or
if you have developed the property, please provide the
approximate date of completion.

Location Of Property

Where is the property located? Please provide town/city, and country.