What is the capital gains tax exclusion on a primary residence?

Capital gains and losses on the sale of your primary residence could be fully or partially disregarded when your net capital gains or aggregate capital losses are calculated, as long as various requirements are met.

The exclusion only applies if you own the primary residence as an individual or through a special trust. The exclusion was R2 million for tax years up the end of February 2026 and a R3 million exclusion applies from 1 March 2026.

There are two rules which may apply to each primary residence on which you make gains or losses.

For the exclusion to apply, you must have an interest in the property, which means a right to the property or a share in a share block company or a right of use or occupation of the property. The rules do not apply if you only have a right to a home loan or a right in a trust.

The rules also refer to a property that is a “residence” or “primary residence”, meaning that you have to live in the home for a certain period.

The R3 million rule

Firstly, if the residence is sold or disposed or deemed disposal of for R2 million or R3 million (depending on the tax year) or less, the whole capital gain is disregarded unless:

• You, as the seller, or your spouse, did not use the residence as your primary residence for the whole of the period that you held your interest in the residence, or
• You, as the seller, or your spouse used the residence, or part thereof, for business purposes at any time while you held an interest in the residence.

The capital gain may similarly not be disregarded in cases where a special trust owns an interest in a residence that has been sold or disposed of, if the beneficiary of the trust and his or her spouse have not used the residence as a primary residence, and have used it to carry on a trade.

Gains or losses on primary residences do not accumulate over your life for the purposes of this limit, but there is a rule that only one residence at a time may be your primary residence.

Joint owners

The R2 million or R3 million is split when more than one person and / or special trust/s are joint owners of a primary residence. The R2 million or R3 million is, however, split between the owners when more than one person and / or special trust/s are joint owners of a property, as long as each owner is using the property as a primary residence.

This means that if two people each own 50 percent of a property that is their primary residence, they will each be able to disregard a maximum of R1 million or R1.5 million capital gains or losses on the sale of the property, as long as they both use it as a primary residence.

However, if one owner uses their share of the property as their primary residence, and the other does not, then the owner using it as a primary residence can disregard up to R2 million or R3 million on the sale of the property. The owner who does not use the property as a primary residence will not be able to disregard any part of the gain or loss.

The determination of amounts to be disregarded by an individual or special trust is more complex if at any time since 1 October 2001 you or the beneficiary of a special trust:

• Did not always use the property as your primary residence.
• Used the property partly or wholly for business purposes.

If this applies to you, consult the Comprehensive Guide to Capital Gains Tax published by the South African Revenue Service’s (SARS) or get advice from a tax practitioner.  

There are also special rules on calculating the portion of the capital gain or loss that can be disregarded when the residence is on land which is greater than two hectares. In this case it is best to consult the SARS Comprehensive Guide to Capital Gains Tax or get advice from a tax practitioner.

This article was written by Laura du Preez and reviewed by Professor Keith Engel, the chief executive officer of the South African Institute of Taxation. The article has been updated in to reflect the change in the primary residence exclusion from March 2026.