Tax implications of 2010 property rentals

Many property owners are looking to let out their homes to foreigners during the World Cup and so ease the effects of the global economic crisis.

Reported rentals being asked range between a few thousand rand a day and R70 000.

David Warneke, tax partner, said while there was money to be made in property, the taxman also wanted his share of any rental action.

Warneke said: "For tax purposes, the total amount of rental income made must be declared as gross income and will be taxed at the marginal rate.

"A small comfort is that all expenses incurred in the production of this income are deductible. These include commissions paid to rental agents, interest on the bond, electricity, water and rates or levies."

Then there is the cost of insurance, which is likely to increase substantially due to the commercial use of the property.

There is also the issue of personal liability cover, with one letting agent insisting on the presence of a personal liability insurance facility of R50 million.

Property Guide (Sunday Tribune)

Posted at 09:01AM Feb 01, 2010 by Editor in Residential  |  Comments[4]