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Property Investor says: 10 June 2015 at 15:22 I have an income property with a bond of R600k outstanding. I want to switch it to another bank to access R200k equity. I will then have a bond of R800k. This will cost me R30k in legal fees. How do I calculate the interest and fees cost deduction on my next return? Do I use the entire R800k's interest or am I only allowed to deduct 75% (R600/R800k) or should I do a manual sum in excel? Can I deduct the fees or do I keep that for the capital gains sum when I sell? Also do I need to pay income tax on the R200k equity that I am accessing/using? Thank you in advance! |
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TaxTim says: 12 June 2015 at 7:13 IS this property used for earning rental income or is it for your home? |
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Property Investor says: 12 June 2015 at 10:52 Income property = rental. |
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TaxTim says: 12 June 2015 at 15:15 You would be able to deduct the interest and fees as they were due by you. So regardless of how you structure the bond, you will have interest which you owe to the bank. So take the two interest statements the various banks send you to work out the deduction. The bond fees however would be added to the base cost when you do sell the property eventually. You do not pay tax on the additional equity, it is in effect a loan. |
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Property Investor says: 12 June 2015 at 15:31 Fantastic! Thank you so much :) |
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TaxTim says: 15 June 2015 at 7:56 Only a pleasure! |
