'Declare all cup income'

Temporary World Cup landlords advised to declare all income to SARS.

Often encouraged by stories of very high rentals, a surprisingly large number of South Africans are apparently now willing to let out their homes over the World Cup period, says Grant Gunston, senior director of Grant Gunston Inc.

But, he warns, they must be prepared to declare any income from this to SARS.

"If they do not, they risk significant penalties. Although this is a one-off payment it should not be hidden from the taxman," says Gunston.

"Letting out your primary residence during this period could conceivably lead SARS to query whether your home is now being used as a business (an income generator). When you sell, this could result in the profit on the home being reassessed for capital gains tax. By law, the first R1,5 million profit is exempt from tax if the property sold is the owner's primary residence. If the home is an income generator, however, this would not apply.

"Fortunately, the tax experts we have consulted agree this will almost certainly not happen - provided it does not then become a regular practice. SARS' attitude appears to be that a one-off World Cup windfall will not affect the capital gains tax relief enjoyed by individuals in respect of their primary residence."

Gunston warns, however, that those collecting a big rental windfall may find that SARS investigates their tax accounts in some detail and may well uncover other revenues or perks previously thought to be not worth paying attention to. It is therefore important for honest taxpayers to keep thorough records of all their income.

Weekend Property Supplement (Saturday Argus)

Posted at 07:55AM Feb 07, 2010 by Editor in Residential  |  Comments[2]