Tax on rent­ing out places dur­ing the World Cup

Weekend Argus (Saturday Edition) - - PROPERTY -

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.”

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