Written by Nicci
Posted 23 May 2025
The Section 13sex residential unit deduction is a South African tax break for people who invest in new rental properties. If you build or buy new units to rent out, you can deduct part of the building cost from your taxable income each year. To qualify, you must own at least five new and unused residential units in South Africa that are used for rental.
You can claim 5% of the building cost (excluding land) each year for 20 years. If the units are classified as low-cost housing, the deduction increases to 10% a year for 10 years.
Example
If you build five new apartments and the total building cost is R5 million (excluding land), you can deduct R250,000 (5% of R5 million) from your taxable income each year for 20 years. That’s a total tax deduction of R5 million over time, which significantly reduces the tax you pay.
This incentive makes rental property investment more attractive while also helping grow South Africa’s housing supply.
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