Original Research

Exploring the South African tax consequences of a residential property lottery

Silke de Lange, Danielle van Wyk
South African Journal of Economic and Management Sciences | Vol 21, No 1 | a1951 | DOI: https://doi.org/10.4102/sajems.v21i1.1951 | © 2018 Silke De Lange, Danielle Van Wyk | This work is licensed under CC Attribution 4.0
Submitted: 23 May 2017 | Published: 12 April 2018

About the author(s)

Silke de Lange, Department of Mercantile Law, Faculty of Law, Stellenbosch University, South Africa
Danielle van Wyk, School of Accountancy, Faculty of Economic and Management Sciences, Stellenbosch University, South Africa


Background: Disposing of a residential property by way of a lottery sounds peculiar, but a number of these transactions relating to residential properties in South Africa have recently taken place. As this is not an ordinary way of disposing of and acquiring residential property, it is submitted that it is necessary to explore the tax consequences resulting from such a transaction.


Aim: The objective of this article is to explore some of the most pertinent South African tax consequences of such a residential property lottery transaction, from the viewpoint of the owner (‘seller’) who disposes of the residential property and the winner (‘purchaser’) who acquires the residential property in terms of the lottery.


Setting: This article examines existing literature in a South African income tax environment to explore the tax consequences resulting from a disposal and acquisition of residential property by way of a lottery.


Methods: A non-empirical study, which entails the study of the various South African tax provisions and an application thereof to the facts of the lottery transaction, was conducted. A doctrinal research approach was followed within the realm of exploratory research.


Results: Disposing of and acquiring residential property by way of a lottery results in a number of actual tax consequences, as well as a number of uncertainties regarding taxes (referred to as uncertain considerations).


Conclusion: The conclusion is reached that the possible tax consequences of such a transaction can create tax risks or can result in unintended tax consequences relating to inter alia income tax (including capital gains tax), transfer duty and donations tax. The insights provided in this article do not always result in conclusive answers but they may, however, result in further research to be conducted, and a number of such areas for further research were identified. Should residential property lottery transactions occur more frequently in South Africa in future, it is recommended that the South African Revenue Services (SARS) issues clear guidance on the tax treatment from the perspective of the owner and the winner of such a transaction to ensure that any uncertainties are dealt with correctly.


lottery; property; income tax; capital gains tax; transfer duty; donations tax


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Crossref Citations

1. An exploratory study on value-added tax consequences of a residential property lottery in South Africa
Danielle van Wyk, Andrea van der Merwe
South African Journal of Accounting Research  vol: 37  issue: 1  first page: 19  year: 2023  
doi: 10.1080/10291954.2022.2069388