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Inclusion of rental expenses in CGT calculation

Posted 24 February 2017 under Tax Q&A

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Mike says:
23 February 2017 at 19:11

If I earned no income from a rental property (which I rented out for about 7 years) and sold it in the same year, can I still deduct the expenses (levies, interest, rates) normally incurred from income, or should I add these costs to the Selling cost or Base cost to reduce capital gains tax?

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TaxTim TaxTim says:
24 February 2017 at 10:02

Unfortunately these are operating costs (and not capital costs) and therefore can't be used in the Capital Gains Tax calculation.

Please see our Capital Gains Tax Calculator to assist with your calculations. You would still capture these expenses in your tax return and depending on the circumstances, SARS may ring-fence them and carry forward the loss to be set off against future income. Or they may deduct them against your current income, Please read our blog on Ring Fencing for further clarification.

Mike says:
24 February 2017 at 16:11

Will these operating expense still be accepted, even if there was no income (even though I tried renting it and the decided to sell) for this period? Also, Could ring fencing apply even the property is sold, as in this case?

TaxTim TaxTim says:
24 February 2017 at 17:10

You must still declare the expenses in your ITR12 and then SARS will decide whether or not to ringfence it.


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