Making sense of property tax benefits
If you’ve recently bought property for sale in Boksburg and want a better understanding of tax benefits, then we will go over some important details that you should keep in mind, as well as discussing some of the documents that you should have ready.
So let’s get this out the way first, if you have bought property for sale in Boksburg that is your primary residence, you cannot deduct costs for income tax purposes.
However, if you have bought property that is being leased to a tenant, then there are tax benefits that you can claim back. It is important to note that you should be receiving a monthly rental income from the property, and it must be listed in the taxable income of the property owner. It does not matter whether you are an individual, corporate entity or trust.
There are a wide range of residential accommodation options that offer tax benefits, including holiday homes, bed and breakfasts, guesthouses, homes, garden flats and similar residential buildings.
“The important factor with owning an investment property is that all expenses are deductible from the rental income, before tax is calculated. 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,” said Craig Hutchison, CEO Engel & Völkers Southern Africa.
Deposits paid by tenants do not fall under taxable income, however, expenses that are allowed to be included are the likes of garden services, bond interest, security, levies, homeowner insurance, rates and taxes. However, any home improvements cannot be looked at as repairs and maintenance.
Also be sure to remain on top of your paperwork, as you’ll need it when tax season comes around. Some of the documents you need to include are monthly bank statements, rates and taxes, insurance statements, invoices for repairs, advertising or agency fees as well as any other official forms of payment for deductible costs.
If you are new to leasing out property, and remain unsure of how to go about properly dealing with taxes, it is best to acquire a professional consultant to provide assistance with the process.
