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Ask a Tax Man – What deductions apply to my rental property?

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Q

Hi, I was self-employed but recently took up employment. I have a rental property in another province from which I earn a small income. Can you please explain what deductions I will be able to claim on this income? Thank you – Riaan

A

Hi Riaan, You are allowed any deductions that contribute to the generation of income. For example

  1. Water and lights.
  2. Levies of any sort.
  3. Rates and taxes.
  4. Interest on the bond if applicable.
  5. Bank charges on the bond.
  6. Repair and maintenance.

Note: Improvements are of capital nature and cannot be claimed to reduce income.

  1. Depreciation on furniture and fittings if the property is furnished.
  2. Wages of cleaners and gardens services.

One issue that has come to light in recent years is that the South African Receiver of Revenue has placed a lot of emphasis on expenses regarding rental income. If your Rental income is for a full 12 months of the tax year (1 March 2016 – 28 February 2017) they will allow all the deductions.  If not expenses need to be reduced prorate in correlation to the rental income received. This means you cannot claim expenses for the period that no rental income was received.


Got a burning tax question? E-mail mariette@hometimes.co.za  and we will be sure to assist you.


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Who is Armando Small?

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Small is a certified tax adviser and owner of Capstone Group. His company provides a range of services from bookkeeping, audits and tax services to secretarial and trust services. He is a self-proclaimed Jack-of-All-Trades who will admit that he is still not entirely sure of what he wants to do with his life. What he does know, however, is that he is not interested in taking employment; he wants to be an employer

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