www.MyPE.co.za: Our
panel has received a question from a landlord who wants to know what
the tax implications of rental income are.
He asks what has to be declared and what expenses can be deducted from
such income.
In terms of our tax
rules, says Rian du Toit from Du
Toit Strombeck Attorneys in Port
Elizabeth, all revenue or income earned from any source has to be
declared to the South African Revenue Services (Sars).
“That means that rental income has to be declared as part of your gross
income.”
Interest on the property’s bond, repairs and maintenance are expenses
that are deductibe against the rental income, according to Du Toit.
“If it forms part of a sectional title scheme, the levy is also
deductible. So too municipal rates and taxes and the letting agent’s
fees should you make use of one.”
Du Toit says expenses that are not recovered from the tenant, including
security, garden services and utilities, can also be deducted.
“The rental from a property is added to your income from other sources.
Once exempt income as well as the allowed deductions have been
subtracted, tax is payable on a sliding scale.”
Du Toit says keeping these principles in mind is therefore important
when calculating what the potential rental income to be generated by a
property has to be.
Charlotte Vermaak
from Chas
Everitt Port Elizabeth says it may well be that rental income
may be
insufficient to cover bond payments. “However, keep in mind that
capital appreciation forms part of the investment benefits linked to
property.”
Capital appreciation, says Vermaak, opens up the topic of capital gains
tax when selling a property. “This is a vast field, but keep in mind
that
