You Made Aliyah and Now Want to Sell Your SA Flat. What Is Section 35A?
Once you are a non-resident, the moment you sell South African immovable property for more than R2 million, Section 35A of the SA Income Tax Act forces the buyer, not you, to withhold a slice of the purchase price and pay it straight to SARS: 7.5% if you are a non-resident natural person, 10% for a non-resident company, and 15% for a non-resident trust1. This is not a tax a resident South African ever meets on a normal home sale; it switches on precisely because you have left.
Not advice
Here is the part that blindsides almost every SA oleh: while you lived in South Africa, you could sell your home, the conveyancer paid the transfer over, and the capital-gains tax was sorted out later on your assessment. The day you become a non-resident, the machinery changes. SARS no longer trusts that it can chase you across borders for the tax, so it makes your buyer collect an advance slice up front. The good news, and the bit most people miss, is that this withholding is a prepayment, not a separate final tax. You can get the over-collected portion back. You just have to know how the SA side and the Israeli side fit together first.
Does the Buyer Really Have to Withhold From My Sale Price?
Yes, when two conditions are met: the seller is a non-resident and the purchase price exceeds R2 million1. Below R2 million there is no Section 35A withholding at all. Above it, the buyer must withhold from the full purchase price at the rate that matches what kind of seller you are, then pay that amount to SARS1. Note the base: the withholding is a percentage of the whole sale price, not of your gain, which is exactly why it routinely over-collects relative to the real tax.
| Non-resident seller is a... | Section 35A rate withheld from the purchase price | Applies when |
|---|---|---|
| Natural person (an individual oleh) | 7.5%1 | Price above R2 million; seller is a non-resident |
| Company | 10%1 | Price above R2 million; seller is a non-resident |
| Trust | 15%1 | Price above R2 million; seller is a non-resident |
| Price R2 million or less (any seller type) | No withholding | Below the threshold; tax handled on assessment as normal |
The withholding is a prepayment, not the final tax
How Does South African Capital-Gains Tax on the Sale Actually Work?
The withholding is only a placeholder; the real charge is South African capital-gains tax on the gain you made. For a natural person, SA grants a R50,000 annual exclusion on capital gains, and the maximum effective CGT rate for an individual is about 18%2. Your gain is broadly the proceeds less your base cost (what you paid plus qualifying improvements), so on a long-held property the taxable gain, and therefore the real CGT, is usually a fraction of the headline price the 7.5% was withheld from.
Does the Primary-Residence Exclusion Still Help Me?
Sometimes, but rarely in full for an oleh. SA gives a primary-residence exclusion of up to R3 million of gain on a home that is your primary residence2. The catch for someone who has made aliyah is that once you move to Israel the property generally stops being your primary residence, so the exclusion is typically apportioned to the period it genuinely was your main home and the years you held it as a non-resident (or let it out) usually fall outside the relief. If you sell soon after aliyah while it was recently your home, more of the exclusion may survive; the longer it sits as a non-resident-owned asset, the less of the R3 million applies. This is fact-specific, confirm the apportionment with an SA tax practitioner.
A Worked Example: An R5 Million Cape Town Flat, SA Side vs Israel Side
Suppose Sarah made aliyah and has properly ceased SA tax residency, so she is a non-resident natural person. She sells her Cape Town flat for R5,000,000. She bought it years ago for R2,000,000, so her gain is roughly R3,000,000 before any exclusions.
On the South African side, because the price exceeds R2 million and she is a non-resident individual, her buyer must withhold 7.5% of the full R5,000,000, which is R375,000, and pay it to SARS1. But that R375,000 is a prepayment, not the tax. Her actual CGT is computed on the R3,000,000 gain: after the R50,000 annual exclusion, at a maximum effective rate of about 18%, the real CGT is well under R375,000 (and lower still if any primary-residence apportionment applies)2. When she files her SA return, the R375,000 withheld is credited against that smaller liability and she claims the overpaid balance back from SARS1. Had she expected this gap in advance, an NR03 directive could have reduced the up-front withholding instead of tying up cash1.
On the Israeli side, the flat is a foreign asset and the gain is foreign-source. As a new oleh, Sarah's foreign gains fall under the 10-year exemption, so within that window Israel does not tax the SA property gain (from 1 January 2026 some still-exempt foreign income and gains become reportable to the Israel Tax Authority, declared but still tax-exempt for affected arrivals)4. Sell after the 10 years are up and Israel can tax the gain as a resident, at which point the SA-Israel treaty lets you credit the SA tax against the Israeli charge so the same gain is not fully taxed twice. Same flat, same sale: the SA cash-flow is the withholding now and a refund later, while the Israeli result depends entirely on where you are in your 10-year oleh clock.
PFIC: out of scope here
How Does Ceasing SA Tax Residency Tie Into All This?
Section 35A only applies because you are a non-resident, and you become one by ceasing SA tax residency, the deliberate step SARS handles3. Cessation does two things at once that olim often conflate. First, it flips you into non-resident status, which is what triggers the buyer's withholding obligation on a later property sale. Second, it can trigger the section 9H deemed disposal: on the day you cease residency, SARS treats you as having sold your worldwide assets at market value, an exit charge on accrued gains3. Crucially, SA immovable property is excluded from that section 9H deemed disposal, so your Cape Town flat is not caught by the exit charge; instead it stays inside ordinary SA CGT and is taxed on the actual future sale, with Section 35A collecting the advance3.
So the property follows a different track from the rest of your portfolio. Your SA shares and other worldwide assets can be hit by the section 9H exit charge when you cease residency; your SA real estate is left out of that and instead meets CGT plus the Section 35A withholding when you eventually sell. On the Israeli side, none of this is a death tax or a transfer tax: Israel taxes the gain on sale once the 10-year exemption lapses, and Israeli real-estate tax such as מס שבח (mas shevach) (the appreciation tax) and מס רכישה (mas rechisha) (purchase tax) apply to Israeli property, not to your South African flat.
South Africa vs Israel: Selling Your SA Property at a Glance
| Question | South Africa | Israel |
|---|---|---|
| Who collects tax at the sale? | The buyer withholds under Section 35A (7.5% / 10% / 15%) when the price tops R2 million and you are a non-resident1 | No buyer withholding on a foreign property; you self-report the gain if Israel taxes it |
| Is the up-front amount the final tax? | No: it is a prepayment credited against your assessed CGT; over-collection is refundable, and an NR03 directive can lower it1 | Not applicable; nothing is withheld up front |
| What is actually taxed? | The capital gain: R50,000 annual exclusion, max effective rate about 18%, possible primary-residence apportionment2 | The gain is foreign-source; tax-exempt during the new-oleh 10-year window, taxable after, with a treaty credit for SA tax4 |
| Effect of ceasing SA residency | Makes you a non-resident (triggers 35A); section 9H exit charge hits worldwide assets but excludes SA immovable property3 | Becoming an Israeli resident starts the 10-year clock; reporting reform from 1 January 20264 |
Quick check
A non-resident oleh sells an SA flat for R5 million and R375,000 is withheld under Section 35A. The real capital-gains tax works out lower. What happens to the difference?
Once you make aliyah and become an SA non-resident, selling South African immovable property for more than R2 million triggers Section 35A: your buyer, not you, must withhold a slice of the full purchase price and pay it to SARS. The rate is 7.5% for a non-resident natural person, 10% for a non-resident company, and 15% for a non-resident trust. This withholding is a prepayment of your South African capital-gains tax, not a final or separate charge, so it is credited against your assessed CGT and any over-collection is refundable. Because it is taken from the whole sale price rather than your gain, it routinely over-collects; you can apply to SARS for a directive on form NR03 to have a lower or zero amount withheld up front. Separately, SA capital-gains tax on the actual gain still applies, with a R50,000 annual exclusion for an individual, a maximum effective rate of about 18%, and a possible primary-residence exclusion of up to R3 million that is usually apportioned to the period the home actually was your main residence. On the Israeli side the flat is a foreign asset: a new oleh's 10-year exemption keeps the foreign-source gain tax-free during the window (reportable from 1 January 2026 but still exempt for affected arrivals), and after the window Israel can tax the gain with an SA-Israel treaty credit for SA tax paid.
If you are a non-resident, yes. Because the price is above R2 million and you are a non-resident natural person, your buyer must withhold 7.5% of the R4 million, which is R300,000, under Section 35A and pay it to SARS. That amount is a prepayment of your South African capital-gains tax, not a final charge, and the excess over your actual CGT is refundable on assessment.
Often, yes. Where your real capital-gains tax will be lower than the standard withholding, you or your conveyancer can apply to SARS for a directive on form NR03 to withhold a lower or zero amount, supported by the offer to purchase and a tax calculation. That fixes the cash-flow up front instead of waiting for a refund after you file.
It depends on your oleh clock. As a new resident, your foreign gains fall under the 10-year exemption, so within that window Israel does not tax the SA property gain, though from 1 January 2026 some still-exempt foreign income and gains become reportable, declared but tax-exempt for affected arrivals. If you sell after the 10 years are up, Israel can tax the gain, but the SA-Israel treaty allows a credit for the SA tax paid so the same gain is not fully taxed twice.
Possibly in part. The primary-residence exclusion of up to R3 million applies to a home that is your primary residence. After aliyah the property generally stops being your main home, so the exclusion is typically apportioned to the period it actually was, and the non-resident-owned or rented years usually fall outside it. Confirm the apportionment with an SA tax practitioner before relying on the full R3 million.
Then Section 35A does not apply and your buyer withholds nothing. You still owe South African capital-gains tax on any gain, reported and settled on your SA assessment in the normal way, with the R50,000 annual exclusion and the individual CGT rate.
No. The section 9H deemed disposal on ceasing residency excludes SA immovable property, so your SA flat is not caught by the exit charge. Instead it stays inside ordinary SA capital-gains tax and is taxed on the actual future sale, with Section 35A collecting the advance at that point. Your other worldwide assets are the ones the section 9H charge can reach.
