Please note that you are using an outdated version of Internet Explorer which is not compatible with some elements of the site. We strongly urge you to update to a newer version for optimal browsing experience.

Tax on investment property?

12 Jun 2014

A Property24 reader asks:

A Property24 reader wonders if his wife buys an additional property how tax works and what can be claimed.

My wife and I have just sold our main property on the south coast of KZN, registered in both names, and will be moving into the official residence of a residential estate. I have another property registered in my name in the Eastern Cape currently used as a holiday home, but eventually it will be our retirement home.  If my wife buys a property on the estate with the aim to receive a rental income while she is working as an educator at a private school, would that mean:

  1. That she will be paying tax on both incomes (jointly)?
  2. This property is situated in the residential estate managed by a body corporate. Can costs for example, levies, maintenance, etc be deducted from the rental income if she keeps some sort of an accounting system bearing in mind that the property will be registered in her name and not in a trust. I presume the books do not have to be audited due to the average income through rentals, being approx R60 000 per annum?
     

Johan Swart, tax manager at Legal & Tax, advises:

Answer to question 1:

This deals with the purchase of additional property by a spouse. By the sounds of the question it would seem that the reader and his spouse are married ANC. In that case she will be paying tax on both the rental income and her salary. If married in community of property the rental income will be taxed in the hands of both partners 50/50.

Answer to question 2:

Yes – all related costs can be deducted from the income. Some sort of accounting system will make the completion of the annual tax returns easier. A basic excel spreadsheet will do. All supporting documents must also be kept – bond and levy statements, and any invoices/vouchers relating to costs incurred. No audit required.

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.

About the Author
Johan Swart

Johan Swart

Johan Swart, tax manager at Legal & Tax, is a South African taxation expert with nearly two decades of experience. He began his career at the South African Revenue Service (SARS) as an assessor in 1991, before moving into the private sector as a tax consultant in 1996. Swart holds a Dip Tax (Diploma) and an Advanced Certificate in Taxation from the Institute of Advanced Studies, North West University

Print Print
Top Articles
For the third year running, Waterfall in Midrand, Gauteng, took home top honours beating five of the best mixed-use developments in Asia Pacific, Dubai, Europe, the UK and US.

Although no improvement is expected until late 2020 and the rental market will continue to see price suppression with an oversupply of stock, it's a good time for savvy buyers...

Are you searching for your first home in one of Johannesburg’s trendiest suburbs? Take a peek at these flats in Fourways, Bryanston, Paulshof and more...

Loading

Your browser is out of date!

It looks like you are using an outdated version of Internet Explorer.

If you are using Internet Explorer 8 or higher, please verify that your Internet Explorer compatibility view settings are not enabled.

For the best browsing experience, update to the latest Version of Internet Explorer or try out Google Chrome or Mozilla Firefox.


Please contact our Property24 Support Team for further assistance. Tel. +27 (0)861 111 724