In March, the country's highest court found that the president had violated the constitution by defying an order to repay some of the money in one of several scandals that have dominated his presidency.
The Constitutional Court asked the national treasury to determine the value of the non-security upgrades installed at Nkandla, Zuma's traditional homestead in the rural eastern province of KwaZulu-Natal.
The work included a swimming pool, which was claimed to be a fire-fighting facility, a chicken run, a cattle enclosure, an amphitheatre and a visitors' centre.
The treasury said in a statement that Zuma, head of the ruling African National Congress (ANC) party, should pay back 7,814,155 rand ($509,000).
The main opposition party, the Democratic Alliance, said the sum was too low but was still a damning indictment of the president.
‘The president should pay back 100 percent of the non-security upgrades -- previously we determined that amount to be up to 52.9 million rand ($3.4 million),’ DA spokesman Mabine Seabe told AFP.
‘This (the treasury's report) sends out a clear message to those involved in corruption, especially those in the ANC, that you will be held accountable for your actions, even if you are the president.’
- Election test -
After the Constitutional Court ruling in March, Zuma was urged to step down by several senior ANC veterans of the anti-apartheid struggle that brought liberation icon Nelson Mandela to power in 1994.
But Zuma retains widespread loyalty in the party, and ANC lawmakers have regularly rallied to his defence.
In April, they easily defeated an opposition move to impeach the 74-year-old who has been in power for seven years.
He has been wounded by months of scandals, including his sacking of two finance ministers in four days in December which rocked the markets and saw the rand currency plummet.
South Africa holds local elections in August and, if the ANC suffers a major drop in support, Zuma could lose backing within the party and not serve out the last three years of his final term.
Last week, a high court threw out Zuma's attempt to appeal against a ruling that he should face almost 800 corruption charges that were dropped in 2009 shortly before he came to power.
The charges relate to alleged corruption, racketeering, fraud and money laundering over a multi-billion dollar arms deal.