Tax Season 2021-2022

Tax Season

The 2021/2022 tax year ended on 28 February 2022, so landlords must start getting their ducks in a row for tax season.

If you earn income from renting out a property, or even subletting a room in your home, you need to pay tax on it.

This rental income must be declared to SARS on your tax return (e-filing).

Rental of residential accommodation includes all of the below:

• Airbnb
• Holiday homes
• Bed-and-breakfasts
• Guest Houses
• Sub-renting part of your house e.g., a room or a garden flat
• Residential dwellings 

You can deduct costs incurred on a property against any rental income earned. SARS taxes you on your NET taxable income, i.e., total rental income less total rental expenses.

Examples of non-capital expenses which may be permissible to be deducted include the following:

• Rates, taxes, security, and property levies.
• Interest paid on the home loan (if applicable).

So NOT the entire installment as a portion of that is a capital repayment, but the interest portion.

• Advertising costs of marketing the property.
• Rental agent's management fees or commission for securing a tenant.
• Insurance (only homeowner's insurance and not insurance for household contents).
• Garden services (if applicable).
• Repairs in respect of the area let excluding improvements to the property.

Expenses that are regarded to be of a capital nature cannot be deducted. 

These would include any expenses incurred while renovating or adding on to the property. So, improvements/renovations, etc. are Capital and can't be deducted from the rental income

You are taxed according to your own personal income tax bracket if held in your own name (called a sliding scale).

If you own property in a Company you are taxed at 28%, a Trust is taxed at 45%.

Lastly, if you use a credible letting agent, they will have all necessary invoices and statements of accounts for you or your accountant, which will assist in compiling your tax return.