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Do I declare capital investment into rental property in my ITR12?

Posted 28 October 2015 under Tax Questions



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Confused says:
25 October 2015 at 14:01

Hi TaxTim. When using capital to build or purchase a rental house, is this considered an investment of which the outlay of capital does not have to be declared in the tax year in which it was acquired? (I do not refer to the rental income or taxable portion of the rental income. ) Only in the event of selling the investment property would one then do the sums of proceeds of investment minus the base cost?

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TaxTimTaxTim says:
25 October 2015 at 22:34

Yes this is correct, the capital amount would be the base cost and on sale you would deduct the base cost from the proceeds received to work out the capital gain.


Confused says:
26 October 2015 at 16:53

The answer that I'm looking for is whether I must enter the outlay (base cost of capital investment) in the year in which the property was acquired. I built in 2014-2015 tax period. No sale yet. Currently using it for rental income.


TaxTimTaxTim says:
28 October 2015 at 7:08

No, the investment into capital costs is only applicable when you sell the property. It doesn't have to be declared until such time.


Confused says:
28 October 2015 at 9:41

Many thanks, that answers my question.


TaxTimTaxTim says:
28 October 2015 at 21:27

Only a pleasure!


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