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Examples for tax on rental income

Practical example of how to deduct permissible expenses:

Permissible expenses must be apportioned where less than 100% of the property is rented out. The area which is let must be divided by the total area of the dwelling which includes garages and outbuildings. Permissible expenses must be apportioned where less than 100% of the property is rented out. The area which is let must be divided by the total area of the dwelling which includes garages and outbuildings.

Let’s look at the following example:

Z lets two rooms within Z’s main home on a bed-and-breakfast basis. Each bedroom has its own en-suite bathroom.  The total area of the house (including garages and outbuildings) is 420 square metres, while the area which is let, is 120 square metres. The area let expressed as a percentage of the total area of the house, is 28.57% (120/420 x 100). Z’s total rental income for the 2019 year of assessment was R50 000:

Expenses Rand Expenses apportioned to the area rented (28.57%)
Rates and taxes  R            9 600  R            2 743
Garden services  R          10 000  R            2 857
Security  R            2 000  R               571
Interest on bond  R          60 000  R           17 142
Advertisements (Note1)  R            1 000  R            1 000
Insurance  R            6 000  R            1 714
Improvements to garage (Note2)  R            5 000  R                   –  
Repairs in respect of the area let – water damaged carpets (Note3)  R          12 000  R         12 000
Total Expenses  R       105 600  R         38 027

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