Some tips for property tax benefits
Dealing with tax after you’ve secured property for sale in Tembisa and started renting it out can be a little scary. To assist in providing some clarity, we look at some important tips and information that can help you ease into the process.
When purchasing property for sale in Tembisa for investment, it can be quite daunting figuring out your way around the potential tax benefits and what you should be doing.
To assist with this, we have looked at some important information and tips that could assist you in navigating this tricky area. Remember, if you have purchased property that is used as your primary residence, then none of this applies as it falls under your personal costs.
However, when adding to your property portfolio and renting it out to other people, you then qualify for tax benefits. It is important to note that when you get monthly income from rental for a property, as the property owner you have to list it as a taxable income. It doesn’t matter whether you have purchased the property through a business, trust or just as an individual.
To qualify, your rental property also has to qualify as a listed type of residential property, such as a guesthouse, bed and breakfast, holiday home or garden flat. You can also list parts of the property that you sub-let, such as a garden flat or attached flatlet.
Craig Hutchison, CEO Engel & Völkers Southern Africa, perfectly explains some of the points regarding what homeowners can list as expenses when purchasing investment property. “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,” he said.
Also, it is important to remember that you cannot declare any deposits that have been paid to you by the tenants and also ensure that you know the difference between home improvement and repairs, improvements cannot be deducted.
There is a lot of paperwork that needs to be handled too, so if you are unsure about any part of the process, it may be best for you to enlist the help of a professional, at least until you know how to process your tax forms properly.
