If you have been renting out your investment property this may be something you should read. File Image: IOL
If you have been renting out your investment property this may be something you should read.
The South African Revenue Service (Sars) is now “aiming their pens and ledgers” at property landlords.
If you own one or more investment properties that you let out to tenants, it is important to note that any rent you receive forms part of your income and must be declared to Sars on your annual tax return.
It should be noted that deliberately not declaring it is effectively tax evasion, which is a crime, and could lead to you having to pay a hefty fine – or even go to jail for up to five years.
Berry Everitt, CEO of the Chas Everitt International property group, says Sars is continuing to improve the efficiency of tax collection, and it is increasingly unlikely that any such non-declaration and or under-declaration will remain undetected.
“However, it is not all doom and tax gloom for landlords, because they are allowed to deduct all expenses that are related to the letting of the property from the gross rental received when calculating the taxable amount of income received from a rental property,” Everitt said.
These expenses typically include any interest paid on a bond, homeowners’ insurance premiums, the municipal rates paid for the year, any amounts paid to repair and maintain the property and any levies paid.
“In addition, if you are retired and not earning any other income, it is just possible that your rental income will fall below the tax threshold for your age-group and that you will have no tax liability. But as a landlord, you will still need to submit a tax return or risk having to pay an administrative penalty.”
According to Sars, the tax thresholds for the 2023/24 tax year are currently R95 750 for individuals under-65; R148 217 for people aged 65 to 75 and R165 689 a year for those over 75.
Everitt notes that South African tax law also empowers Sars to issue tax assessments based on estimates to people who regularly fail to submit returns – and to charge penalties and interest on unpaid taxes.
“So if you have not previously declared your rental income, you should seek the help of an accountant or tax consultant to approach Sars and voluntarily rectify the situation as soon as possible.”
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— Business Report (@busrep) March 2, 2023
BUSINESS REPORT
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