31 Oct Options for Foreign Nationals Retiring in South Africa

Are you planning to retire soon? Have you decided where you want to move to for your retirement? Retiring in South Africa has always been a top choice for many foreigners interested in retiring outside of their native country and has several well-defined options for retirees encompassing visa and residency pathways, financial requirements, property ownership, healthcare, and lifestyle considerations. With all the benefits of retiring in South Africa, the options available should be carefully considered.

Visa and Residency Options for Retirees

When it comes to retirement in South Africa, there are various options available for retirees regarding visas and residency, and you will be able to apply for the following:

Retired Person’s Visa (Retirement Visa)

This is the main visa foreign retirees can apply for, which allows them to reside long-term in South Africa. This visa is typically granted for up to four years and is renewable. There is no strict age requirement, though retired person’s visa applicants tend to be 60+. Additionally, applicants need to demonstrate a monthly verifiable income of R37,000 either from pensions or an irrevocable annuity. In some cases, an applicant can apply on the basis of net worth, showing an amount that would equate to R37 000.00 per month for the period of the retirement visa.

Permanent Residency for Retirees

Retirees will need to meet the same financial threshold of R37,000 per month (pension or net worth) to apply for permanent residency, where they can live in South Africa with fewer restrictions than temporary permits.

Financially Independent Permit

This permit is typically for high-net-worth individuals and requires proof of net assets of at least R12 million. The application fee alone is R120,000 upon approval and grants permanent residency from the outset, but it is more stringent and costly. However, a financial independent permit is a perfect solution for an applicant who wishes to continue working or running a business in South Africa once their permanent residency is granted.

Property Ownership and Housing

Foreign retirees are not restricted when it comes to property ownership and housing. Foreigners can own property in their own name or through legal entities; both freehold and sectional title properties are available. In terms of financing, mortgages are possible but limited (up to 50% of property value for non-residents); however, most retirees buy property with cash.

The most popular housing options to consider as a retiree are freehold houses, sectional title units, gated communities, and retirement villages. Renting is, of course, a flexible option for those wanting to try different areas before buying.

Tax Implications

Currently, foreign employment-linked pensions and annuities are exempt from South African tax for tax residents.

Double taxation agreements (DTAs) may mitigate double taxation, but specifics depend on the treaty between South Africa and the foreign country of citizenship. Retirees or those seeking permanent residency should plan to consult cross-border tax advisors to understand their position and optimise their tax situation.

Keep in mind that being a tax resident and a temporary or permanent resident from an immigration perspective are not the same thing. Holding a residency visa or permit for South Africa does not automatically mean that you are a South African tax resident. June Luna Attorneys can assist with obtaining tax advice that is pertinent to your situation, before making a decision on obtaining temporary or permanent residency.

Cost of Living

South Africa is a popular destination for retirees as the general affordability is far less than that of other countries. South Africa’s cost of living is 41-55% lower than the US, with rent up to 60% lower. The estimated monthly budget you will need for a modest yet comfortable lifestyle is between R13,000 – R21,000, depending on your location.

Cape Town is the most expensive city to live in, followed by Johannesburg and Durban. Smaller towns and rural areas are more affordable but may lack certain amenities.

Foreigners can retire in South Africa through the Retired Persons’ Visa or permanent residency if they meet financial requirements. The country offers diverse property options, quality private healthcare with insurance, and active expat communities. Careful planning is crucial for a secure retirement.

CONTACT US and let our team at June Luna Immigration Attorneys help you find out more about the options you’ll have when retiring in South Africa.