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Are bond initiation fees, legal fees and valuation fees deductible for tax?

Posted 23 March 2016 under Tax Questions

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Paul says:
23 March 2016 at 8:57

Hi, I have registered as a provisional tax payer and did my tax return in August. My rental expenses (levies, interest and taxes) are greater than my rental income I earn. Do I still need to file the provisional tax payer tax return now and see if any payments are due?

I have paid for your services for my personal income tax, but haven't received any of my tax information yet (for investments, medical aid etc). Must I just wait until those all come later in the year and send them through as and when they come?

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TaxTimTaxTim says:
23 March 2016 at 10:14

If you had the result of less than R30 000 as taxable income - ie profit then you do not need to file a provisional tax return, however if this loss is just a once off and you usually make a profit then it is best to continue filing a provisional tax return.

Filing season only opens on 1 July, but you can begin the tax return as soon as documents do come in to be ready for the opening of tax season.

Paul says:
23 March 2016 at 13:24

Hi, I have calculated a loss in the current year for my investment property by calculating:


Bond repayments
Valuation fees
Agent fees
Bond registration costs
Legal fees

Is this correct and can this loss be carried forward to offset future profits?
Should I complete a provisional tax return? I did register and do one in August for period 01

TaxTimTaxTim says:
23 March 2016 at 14:37

Bond repayments are not deductible, only the interest on the bond.

Bond initiation fee R 5 700.00
Legal fees R 7 259.00
Valuation fees R 2 793.00
Bond repayments R 65 057.26
Interest on Bond R 55 240.71

The legal, valuation and initiation fees go towards your capital gain when you sell the premises. The bond repayments excluding interest are not deductible. Therefore your loss is a lot smaller, however it would be best to file the IRP6 anyway.

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