It’s a legal and moral obligation to pay the correct amount of money to the South African Revenue Service, but that doesn’t mean that you have to pay more than you’re obliged to. Whether you are buying a home for yourself and your family, or renting a property, by following our five simple tax tips you can ensure that your tax return is accurate and yet lean.
1. Putting The Property In Your Own Name
When buying a property one of the first decisions you will have to make is whether to put the property in the name of yourself or your spouse, or in the name of a company. If you are a South African resident then it makes sense to put the property in your own name, thus avoiding the higher rate of tax that would be applicable to a corporation. As an individual property buyer you will be eligible for capital gains tax exemption up to the value of R1.5 million.
2. Furniture Depreciation
Letting a property is a great way to earn a second income. There are also tax benefits, so it’s important to know what expenses you can claim when you file your tax return to SARS. Depreciation in furniture value is one such cost, as the value of your furniture in the rented property will fall year by year. The amount you can claim for furniture and household appliances currently stands at 15% of the depreciated value per year.
3. Property Agent’s Commission
Have you used the service of a property agent to find a tenant, or to manage your relationship with a tenant? If so, the agent’s commission can be tax deductible when it comes to filing your individual tax return in July.
4. Bond Interest Payments
Is the property that you rent out to a tenant bonded? If so, then you have another expense that can be claimed against your individual tax. The portion of interest that you paid on the dwelling relative to the property, is a deductible expense.
5. Renovations And Repairs
If you’re a landlord you’ll know that carrying out renovations and repairs can be a regular and necessary expenditure. These costs may be tax deductible, but you do need to be careful. If you buy and install new furniture or fittings these cannot be claimed against your personal tax bill, but the cost of renovating and repairing existing furniture is an allowable expense.
All of these tips can save you money as a property owner, but it’s also advisable to seek advice from a professional tax expert before submitting your tax return.