Following a recent article published by Property24 - Tax & garden flat - what can I claim? - three readers had questions relating to renting out a room in a house, an investment property in a sectional title scheme and a flat.
Following a recent article published by Property24 three readers had questions relating to renting out a room in a house, an investment property in a sectional title scheme and a flat.
Johan Swart, tax manager at Legal & Tax, advises our Property24 readers:
Q.1 Tax and investment property - what can I claim?
Further to the recent Property24 article regarding rental income (Tax & garden flat- what can I claim?), I would like to clarify if levies rates and taxes can be offset against the rental income. In my case I am renting out a sectional title apartment and have a bond on the property.
A. Levies, rates and taxes and interest paid on the bond can be offset against rental income received. Other expenses that would qualify to be deducted from rental income are repairs, maintenance, commission paid to the rental agent and property insurance.
Q.2 - I rent out a room in my house, what about tax?
I currently rent out a room inside my house. In a recent article (Tax & garden flat- what can I claim?) it said “A reader says he rents out a granny flat and wants to know if he must declare the income” - must I declare the income I receive on my room rental and if so what tax deductions can I claim?
A. In the strictest interpretation of the Income Tax Act all income must be declared, so rental received for a room in your house would be included in that definition. All deductions will have to be apportioned in relation to the size of the room to the rest of the property - for example, if the room size is 15 square metres and the property size is 150 square metres, you will be able to claim 10% of the expenses. Examples would be interest on the bond, water and lights, and rates and taxes. Any specific repairs and maintenance done to the room will also be deductible from the rental income received.
Q 3 - Renting out my flat and paying tax
I have a flat that's been rented out, but the rent is paid into the bond each month. Do I need to show that on my tax forms?
A. Whether the rental income is paid into the bond or to you directly is irrelevant - you still receive rental income that must be declared in your annual tax return. If you have followed the subsequent questions by other readers you will also realise that whether you make a profit or loss is also irrelevant to the declaration to be made in your annual tax return.
Readers may submit questions to Property24’s Guest Expert panel and/or comment below. We may not be able to answer all questions received, but all will be considered.
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