Rental property tax reductions

Ralf Metz's book, Paying less Tax Made Simple 2011, advises that SARS only allows you to claim the following deductions against your rental income:

  • The interest on your mortgage bond or loan raised against the property
  • Rates and taxes
  • Insurance
  • Repairs and maintenance costs - provided that the property is in a lettable condition to start with and you entered into a lease agreement which requires you to make the repairs
  • Expenses incurred on the treatment of any timber against attack by beetles
  • Advertising
  • The cost of commission and rent collections
  • Electricity and water
  • Depreciation of furniture if the property is let fully furnished

The cost of improvements, reconstructions or additions to the property cannot be deducted as these expenses are of a capital nature, says Metz. Neither will a deduction be allowed for repairs if you repair a property which was previously let and which you now want to occupy or sell. To get a deduction you will need to make repairs while your property is being occupied for trade, adds Metz.

Also worth nothing is that there is a very fine line of distinction between repairs and maintenance on the one hand and improvement and reconstruction on the other. Each case will be assessed on its own merits.

From: Moneyweb Tax - 6 May 2011


Categories: Landlord news

Published in: August News


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