The long-awaited 2026/27 Budget has finally been announced — and the overall sentiment is positive. But what does it mean for homeowners and investors?
One of the most significant highlights is that there has been no change to the VAT rate. We all remember the impact of the previous increase from 14% to 15%, which placed noticeable pressure on household expenses. Keeping VAT unchanged provides welcome stability for consumers.
For the first time in three years, personal income tax brackets and medical tax credits will be adjusted for inflation. The medical tax credit increases to R376 (previously R364) for you and your first dependent, and to R254 (previously R246) for each additional dependent. In practical terms, this means more money in your pocket, as you will effectively pay less tax.
However, there are some trade-offs. Regular consumers of alcohol and tobacco will feel the impact of a 3.4% increase in taxes on alcohol and tobacco. In addition, everyone will be affected by the fuel levy increase of 21 cents per litre on 93 octane petrol.
Homeowners have further reason to be optimistic. The Capital Gains Tax (CGT) exclusion on the sale of a primary residence increases from R2 million to R3 million. This adjustment provides meaningful tax relief, as homeowners will not be taxed on the first R3 million of capital gain when selling their primary residence.
For small businesses the increase in the VAT registration threshold from R1 million to R2.3 million is a significant relief. This creates more room for growth, encourages entrepreneurship, supports job creation, and ultimately strengthens the broader investment environment.
Collectively, these tax savings enhance disposable income and improve affordability. This additional income can be strategically allocated to:
- Investing in growth assets
- Upgrading your existing property
- Saving for a deposit on another property
- Purchasing a buy-to-let investment
The 2026 Budget clearly encourages saving and investing — positive news for long-term financial wellness and wealth creation.
Interest exemption thresholds remain unchanged at R23,800 for individuals under 65 and R34,500 for those over 65. However, the annual contribution limit for tax-free savings accounts increases from R36,000 to R47,000, allowing you to invest an additional R11,000 per year without paying tax on returns. The lifetime contribution limit remains R500,000. At the new annual maximum of R47,000, you can now reach this lifetime limit in approximately 10.5 years, compared to nearly 14 years previously. Accumulating R500,000 in a tax-free vehicle provides a valuable long-term financial cushion, particularly for retirement.
On the retirement front, the annual tax-deductible contribution limit increases from R350,000 to R430,000. The rules for the deduction calculation remains unchanged at 27.5% of the greater of your remuneration or taxable income, subject to the new R430,000 maximum. This expanded limit presents a meaningful opportunity to strengthen retirement savings while benefiting from additional tax relief.
Investors earning capital gains from shares, unit trusts, and similar assets will also benefit, as the annual Capital Gains Tax (CGT) exclusion increases from R40,000 to R50,000. This allows investors to realise higher gains each year without incurring tax.
For property investors, the transfer duty exemption threshold remains unchanged at R1.21 million. While this is disappointing, improved affordability and higher disposable income can still support property investment activity. That said, long-term property confidence remains closely tied to consistent municipal service delivery — an area where concerns persist.
High interest rates continue to constrain both consumers and investors. We remain hopeful that further rate cuts in March and May 2026 will provide additional relief. Lower interest rates would make homeownership more accessible for first-time buyers, improve affordability for investors, and unlock broader wealth-creation opportunities.
In summary, the 2026 Budget delivers meaningful tax relief, improving disposable income and affordability. Commitments to infrastructure development support increasing property values, while backing small businesses stimulates job creation. Increased employment drives housing demand — and together, these factors could pave the way for stronger growth in the property market.
