Here’s how to calculate monthly tax liability with rental as your only income
Q
Hi, could you please advise about taxation rates if I rent out my house? I am not employed and do not have any other taxable income. My house would be rented out for R58,000 gross per month and I would receive R47,000 net after paying rates, taxes and estate levies. I have a bond of R1,5m on the property. What rate of tax would I pay and how is it calculated? Many thanks – Sarah
A
Hi Sarah, the question is a little open ended as it all depends on the timing of when the rental on the property will start.
I am going to work on the following assumptions:
- The house will be rented out for the full tax year of 2018 (1 March 2017 to 28 February 2018).
- You are the only owner of the house.
- You are below the age of 65 years.
The calculation will be as follows.
| Monthly account | Yearly account | |
| Income | R58,000 | R58,000 x 12 = R696,000 |
| Expenses* | R 11 000 | R11,000 x 12 = R132,000 |
| Net income** | R 47 000 | R47,000 x 12 = R564,000 |
| Taxable income | R564,000 |
| Tax (based on the R555,601 – R708,310 bracket) | R149,475 + (R8,400 x 39%) = R157,875 |
| Minimum rebate 2018 (65 years and younger) | R13,635 |
| Total tax payable per year | R144,240 |
| Total tax amount payable per month | R12,020 |
*Expenses can include water and lights, levies, bond interest, bond bank charges, repair and maintenance and cost recovered in rental contract.
** Net income is used to calculate taxable income. Remember SARS allows retirement annuity deductions and medical aid deductions to reduce your net income.
SARS will consider you to be a provisional tax payer and you will need to submit a provisional tax return on August 2017 and February 2018.This allows you to make the total payment set aside to SARS. If you do not you might have penalties for under declaration of income and provisional tax.
Speak to your tax consultant first to make sure that you have included all your other income and expenses allowed before you submit your return.
Got a burning question? Email mariette@hometimes.co.za and we will be sure to assist you
Who is Armando Small?
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
