Tax Consequences of Rental Income | Part 2 Rental Income Series

Episode two of the Rental Income Series - I discuss the tax on rental profits for individuals, trusts and companies. A small mention of VAT and finally, the use of Trusts as a way to reduce taxable income.
Business contact: [e-mail]
Social Media Links:
Twitter: / andrebothmatax
Important Links:
sars.mylexisnexis.co.za/ - Tax Legislation
www.sars.gov.za/Pages/default... - SARS website
secure.sarsefiling.co.za/app/... - eFiling Login

[@andrewkaliati8071]

This really helped me a lot. Thank you!

[@AndreBothmaTax]

Glad to hear!

[@its_Lee_Mo]

Thank you for the knowledge Andre

[@godfather_Gb]

Wow! This was so needed,thanks man🙏👌

[@musicalshares8457]

Great Video!

[@TheTrdrX88]

Lovely stuff🔥🔥🔥

[@lorencentimane5218]

Great insights

[@pooveshinnaicker4177]

Great video, can you please cover split owership of a rental property

[@sibabalweduda5219]

This was the most informative video I have ever watched, thanks this is powerful stuff.

[@AndreBothmaTax]

Glad it was helpful!

[@EbrahimJohnson]

Yes I agree, I would like to know how to set up a basic family trust and how much it would cost, as I've been really interested in creating some generational wealth for my family. Where are you based, and how can i use your services? Thanks alot 😅

[@truespirit2106]

this is great content

[@AndreBothmaTax]

Thank you

[@yusirahwhite3984]

Thank you! Such a clear and informative video. Could you please do more videos on trusts 🙏 TIA 🙌

[@AndreBothmaTax]

Thanks for the compliment Yusirah - I think I should do a video series on Trusts soon. Perhaps after my Crypto series.

[@lebo9879]

Hi Andre, Thanks for the insightful video. I would like to find out if we have something similar to the 'IRS Code Section 1031' in South Africa? Section 1301 states that you could postpone CGT from a sale by purchasing a similar property within a certain period of time. i.e. within 180 days

[@AndreBothmaTax]

Unfortunately not. You can't postpone the CGT in South Africa

[@Y_Yx_x]

could you live off renting out 5 properties?

[@AndreBothmaTax]

Depends on whether they are paid off.

[@kaygeemapheto5625]

Hi.can i distribute rental income to beneficiaries in a trust even if they are minor's an register them for tax?please advice

[@lorramokoka7778]

Morning I want to install solar panels and Jojo tanks at my rental property. Can I claim costs from SARS

[@AndreBothmaTax]

You must check with your tax practitioner. My guidance is general and not specific, unfortunately.

[@tshepomajosi7246]

Hi andre. A friend of mine bought property in his personal name. He also registered a company and is receiving the income in that company. So I said to him I don't think that's how it works because the assets belong to him and not the company. But my knowledge is limited. Are you able to shed light?

[@AndreBothmaTax]

I'm not sure about the technical aspect of it, but the company can own the property (I'm just not 100% sure about whether the company would need to pay transfer duty) to get the property on their books.

[@thokozaninkosinathikhumalo77]

If all of the rental income is used to pay off the bond of the property and when the income is more than the monthly installments, does that money still have to be paid to sars?

[@AndreBothmaTax]

Correct, it means that you are making a profit. Rental profits are taxable.

[@ebrahimsolomon4902]

can you please talk about what constitutes as repairs vs betterment

[@AndreBothmaTax]

Here's the short version: Improvements actually raise the potential value of the property. Repairs merely repairs or replaces what's broken to it's original condition, doesn't affect the potential value of the property.

[@humbushumbus3396]

Lets say i have a bond but i spent more money developing the property to generate more money(income),how do i deal with that tax wise?does it fall under maintance ?

[@AndreBothmaTax]

Property development / Improvements / Renovations are not considered maintenance. It forms part of the base cost of the property.

[@raeesjohaadien1]

Hello. Just to confirm does the money need to physical go to the beneficiaries or is it just on paper that it went them?

[@AndreBothmaTax]

The beneficiaries actually need to declare it on their returns and there has to be a paper trail. An accountant / CA will probably be better able to answer whether the physical cash needs to go.

[@ashleybutler6571]

Can you break down the "rental expenses "

[@roxannesiwele]

Check out part one, he covered this..

[@jldp24]

Rent is 5k. Mortgage principle is 4k. Interest is 2k expense are zero. .overall is 1k loss. Tax exposure is on the 3k? 5k rent income less interest? Mortgage principle is not to be deducted..is that how it works.

[@AndreBothmaTax]

Yes that's perfect - Capital repayment isn't tax deductible, only the interest portion.

[@jldp24]

@@AndreBothmaTax the rental propoerty asset class sucks as a growth vehicle for the middle class guy. You will need to show assessed losses for the whole bond term..then if to sell suffer cgt. If you do it the right way and submit to sars..and end up losing your job 5 years in..you screwed and have to distress sell. No wonder ppl dont disclose to Sars. It's a joke

[@siphamandlamsibi9619]

Hi, Andre. Please advise. I'm married in community of property. I'm employed and my wife is currently not. I know that SARS splits the rental profit or loss in half. Does my wife needs to file tax returns even though she's not employed and doesn't have an IRP5? If she doesn't, what are the implications? Please help.

[@josephskhosana7546]

HI Andre. Could you please respond to this question. I also need clarity .thanks

[@roxannesiwele]

Same situation on my end. Please advise Andre?

[@tonymellem3107]

Hi. What exactly is rental expenses? Bond repayments?

[@AndreBothmaTax]

Agency fees, levies, water, electricity, INTEREST on bond, insurance etc

[@mashego4245]

What if the beneficiaries are not kids like in the example? Suppose it were adults.

[@AndreBothmaTax]

Adult beneficiaries get the same tax benefits