Tax on renting out places during the World Cup
WITH LESS than six months to the kick-off of the World Cup, South Africa is abuzz with expectation. Soccer fever has struck and with it comes much hope and excitement for an inter national event with potential benefits for all South Africans.
Many property owners want to let out their homes to foreigners during the tournament to try and mitigate the effects of the global economic crisis. Rentals being asked range from about R750 a day to more than R70 000 a day.
However, according to David Warneke, tax partner at Cameron and Prentice Chartered Accountants, these entrepreneurs should not forget that where there is money to be made in property, the usual parties want in and the taxman wants his share of any World Cup property rental action.
“For tax purposes, the total amount of rental income made must be declared as ‘gross income’ and will be taxed at the taxpayer’s marginal rate.
“A small comfort is that all expenses incurred in the production of this income are deductible.”
Then there is the not inconsequential cost of insurance. Warneke says it is highly likely that insurance on home contents will increase substantially due to the commercial use of the property. There is also the issue of personal liability cover.
“You need to bear in mind that rental agents are obliged to give SARS documentation showing the rent collected and paid over to a landlord, and in that way SARS will be able to look out for this income.”