Declaring the cost of building a rental property

Peter-John says:
22 March 2020 at 10:40

I had rental income in the 2019 tax year, I converted part of my house into a 1 bedroom apartment as well as converting my old garage into another, so I currently have 2 flats now on the property. The apartments represent around 34% of the squares of the buildings on the property. Should I then declare 30% of the costs of the property (I.e.: Interest, Rates & Taxes etc as the costs) as the costs?

Also, where do I declare the cost I had incurred in building the units? (Does it come under the "Please enter the amount of other expenses"?) I spent R151 000. Would this would roll over to the 2020 tax year, since I only received the fist tenants at the beginning of 2019?

This entry was posted in Tax Q&A and tagged , , , . Bookmark the permalink.

TaxTim TaxTim says:
23 March 2020 at 18:44

Take the total square meters of the flatlet (let's say this is 180 square metres) and divide that by the total of the house (include garage and outbuildings) to get the percentage. Expenses to be deducted rates and taxes, bond interest, advertisements, agency fees, insurance, garden services, repairs and security. You can't deduct Home Improvements costs against your taxable rental income, they are added to the base cost of the property and will reduce your Capital Gains Tax when you sell the property eventually.

Submit your tax return right here!

TaxTim will help you:

 Do Your Tax Return Easily
 Avoid penalties
 Maximise your refund

Tim uses your answers to complete your income tax return instantly and professionally, with everything filled in in the right place.

Let Tim submit your tax return direct to SARS in just a few clicks!

Get started

Blog Categories

Ask TaxTim

Got a question you want answered about tax?

Visit our helpdesk →

Get Tax Deadlines in your Inbox
We'll tell you when you need to file, along with tax tips and updates.