For many years, foreign property ownership represented one of the last remaining blind spots in global tax transparency. While tax authorities could already see offshore bank accounts, investment portfolios and even crypto assets, immovable property held outside a taxpayer’s home jurisdiction largely escaped automated reporting.

That position is now changing. South Africa’s participation in a new international framework will significantly expand SARS’s visibility into offshore real estate holdings, placing foreign property firmly on its compliance radar.

A Major Shift in Global Transparency

South Africa has signed the Multilateral Competent Authority Agreement on the Exchange of Readily Available Information on Immovable Property, known as the IPI MCAA. This agreement brings foreign property into the global tax transparency framework and marks the final major step in closing gaps that previously allowed wealth to remain undisclosed across borders.

The agreement targets immovable property, an asset class that until now was not covered by automated exchange systems such as the Common Reporting Standard or crypto asset reporting frameworks. With this development, SARS is preparing to access detailed information on foreign property owned by South African tax residents.

Although full implementation is only expected from around 2029, the direction of travel is clear and irreversible.

How the New Framework Will Work

The IPI MCAA operates through two distinct reporting mechanisms, each designed to address a different compliance risk.

The first focuses on ownership visibility. Once bilateral exchange relationships are activated, SARS will receive a once-off transmission of historical foreign property holdings where records exist. This data is expected to include acquisition dates, purchase prices, property characteristics and, in some cases, current valuations based on domestic datasets.

Thereafter, annual automatic reporting will apply to all new foreign property acquisitions by South African tax residents.

The second reporting mechanism targets income and disposals. SARS will receive annual data on rental income generated from foreign properties as well as information relating to sales and capital gains. Crucially, this reporting includes look through provisions that identify beneficial owners even where properties are held through companies, trusts, partnerships or nominee arrangements.

Popular Destinations Already Covered

The initial group of participating jurisdictions includes many countries commonly associated with South African offshore investment and emigration. These include Portugal, Spain, the United Kingdom, Ireland, France, Italy and Greece, among others. While the United States is not currently part of this specific framework, financial accounts held there remain reportable under existing US legislation.

The list of participating countries is expected to expand as international pressure to close remaining transparency gaps increases.

Why the Regularisation Window Matters

Although the agreement has been signed, South Africa still needs to finalise domestic legislative processes and activate bilateral exchange relationships. This creates a practical multi-year window before automatic reporting begins.

This window presents a critical opportunity for taxpayers with undeclared foreign property to regularise their affairs proactively.

The distinction between voluntary disclosure and forced discovery is significant. Taxpayers who approach SARS through the Voluntary Disclosure Programme before detection may benefit from reduced penalties and avoid criminal prosecution. Once SARS identifies non-compliance through automated data exchanges, penalties, interest and enforcement measures escalate rapidly.

Beyond Income Tax Exposure

Foreign property non-compliance does not exist in isolation. SARS routinely shares information with the Financial Surveillance Department of the South African Reserve Bank, which means exchange control consequences may also arise where offshore acquisitions were not properly authorised.

Modern enforcement does not rely on isolated audits. SARS now integrates data from multiple domestic and international sources, allowing it to algorithmically trace funding flows and identify mismatches between declared income, asset acquisition and reported returns.

What Taxpayers Should Be Doing Now

Taxpayers with foreign property interests should take proactive steps well before automated reporting begins. This includes reviewing all direct and indirect holdings, assessing whether acquisition funding was fully declared and compliant, ensuring rental income has been reported correctly and confirming that foreign assets are reflected accurately on tax returns.

Where gaps exist, early professional advice and voluntary disclosure remain the safest and most controlled path to compliance.

A New Compliance Reality

Global tax transparency has advanced steadily since the financial crisis, and the inclusion of foreign property is the final piece of the puzzle. Structures that once provided anonymity are now routinely penetrated to identify ultimate beneficial ownership.

For South African taxpayers with offshore real estate, the message is clear. Foreign property ownership is no longer hidden, and the opportunity to regularise before automated discovery begins should not be ignored. If you require assistance in regularizing your tax affairs pertaining to foreign property holdings, reach out to our team for help.