Know the property tax basics

When purchasing property for sale in Bedforview with the intention of it being an investment that you will rent out, you need to be up-to-date with the tax benefits that you are due.

Of course, when purchasing a home as your primary residence, it will become a personal cost and not something that will be considered as tax deductible.

However, when renting out the property that you have purchased, you can claim back costs but understanding the process can be difficult for those who are not aware of the red tape.

First you should take a look at the type of residential property that you have, and this will indicate whether or not it falls within the required bracket. Renting out a flat, family home or holiday home is acceptable, as well as owning a guesthouse or bed and breakfast. Sub-letting a part of your home, such as a flatlet, garden flat or similar is also within the acceptable scenarios.

It is important that the homeowner, whether listed as a company, trust, or individual, lists the rental income as taxable income. With regards to the costs that can be deducted, it is best to take advice from an expert.  Craig Hutchison, CEO of Engel & Völkers Southern Africa, explains, “These costs typically include property management fees, municipal rates, levies charged by body corporates, repairs and maintenance, insurance premiums and municipal service costs that are paid by the property owner.”

Deposits that are paid by tenants do not fall into this bracket, and it is important that you do not confuse home improvement costs with maintenance or repairs, as there is a difference and the former does not fall within deductible costs.

When it comes to paperwork, keep everything! You require statements and invoices, as well as any official proof of payment for services that are listed within the acceptable costs. To make sure that you are compliant, it is best to discuss all of this with a professional first.