Understanding estate duty & capital gains tax at death

Estate duty

Estate duty is a tax on the dutiable value of your estate when you die. The first R3.5 million is exempt (the 'section 4A abatement'). Above that, duty is charged at 20% up to R30 million of dutiable value, and 25% on anything above R30 million.

Anything you leave to your spouse is deducted before duty is calculated, so a bequest to a surviving spouse generally pays no estate duty — the duty is deferred to the second estate, not avoided. Unused abatement is also portable between spouses, so the second estate can claim up to R7 million.

Capital gains tax at death

When you die, you are treated as having sold all your assets at market value — a 'deemed disposal'. This can trigger capital gains tax in your final return, even though nothing was actually sold.

There is relief: a special R440 000 exclusion applies in the year of death, a primary residence enjoys up to R3 million of exclusion, and assets left to a surviving spouse roll over untaxed (the spouse inherits your original base cost, and the gain is carried forward, not cancelled). For individuals, 40% of the net gain is included in income, giving a maximum effective rate of about 18%.

Why liquidity is the real issue

The most common problem we see is not the tax itself but liquidity — having enough cash in the estate to pay the executor's fee, estate duty and CGT without forcing the family to sell the home or a business at the wrong time.

Good planning lines up that liquidity in advance — often through life cover correctly structured, or by arranging the estate so the cash is there when it's needed.

The takeaway

Estate duty and CGT are manageable when you know the numbers early. Our free estate cost estimator gives you a quick sense of the figures; a conversation with us turns that into a plan.