Your situation requires time-based apportionment. Only the portion of the gain attributable to non-primary-residence use is subject to CGT, and the R2 million exclusion applies only to the residence-period portion.
The calculation, step by step:
- Total capital gain: R 4,600,000 − R 2,100,000 = R 2,500,000
- Residence portion (4/9): R 1,111,111 — eligible for the R2 million exclusion [1]
- Non-residence portion (5/9): R 1,388,889 — fully subject to CGT
- After annual exclusion (R 40,000): R 1,348,889
- Inclusion rate (40%): R 539,556 added to taxable income [2]
The residence portion (R 1,111,111) falls comfortably within the R2 million exclusion, so no CGT applies to that share. Your taxable capital gain is therefore R 539,556, taxed at your marginal rate.
At your projected 2026 marginal rate of 41%, this translates to R 221,218 in CGT. The disposal must be declared on your 2026 ITR12. Stance has flagged the apportionment methodology — it follows the time-basis confirmed in CSARS v Stevens [3], not usage-area, which is a common error.
One thing to verify: if the property was let during the non-residence years, certain holding costs (rates, levies, maintenance) may be deductible against rental income previously declared — these don't affect base cost but the records should be tidied before submission. If you have records of capital improvements during ownership, those increase your base cost.