Getting to grips with property tax

After all the dust has settled when buying property for sale in Benoni and beginning the process of renting out your new investment, you should immediately start getting familiar with tax needs.

When you blink your eyes, tax season will be upon you and when dealing with this for the first time, it can be quite a daunting process. Now remember, purchasing a property that you will use as your own home does not come with deductible costs, but when you plan on leasing it out, then there are things you should be aware of.

Firstly, you need to determine the type of property and whether or not it falls within the required bracket. Running a bed and breakfast or guesthouse is included, as is renting out a family home, flat or holiday home. You can also sub-let a part of your property, such as a garden flat or similar residential options.

The homeowner also needs to list the rental income as a taxable earning, and it does not matter whether the property has been bought in an individual capacity, or as a business entity/trust.

Moving to the costs, Craig Hutchison, who is the CEO of Engel & Völkers Southern Africa, provides a little more detail, saying, “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.”

Excluded from these costs are the deposits paid by tenants as well as home improvement. Though you can claim for repair and maintenance, improvements cannot be claimed so make sure that you familiarise yourself with the difference between the two.

At the state, it may be worth putting some of your budget into hiring a tax consultant. They will instruct you regarding all the other finer details, as well as showcase which paperwork you will need to save during the course of the year to make things simpler.