If your lease obliges you to renovate a building you rent for business, SARS lets you deduct that cost over time under section 11(g) of the Income Tax Act. This free leasehold improvements calculator works out your annual s11(g) allowance for the 2026/2027 (2027) tax year by spreading the improvement cost across your lease period from the date the work was completed. Enter what you spent, the amount stipulated in your lease, and your key dates to see your yearly deduction.
The calculator applies the section 11(g) leasehold improvement allowance for the lessee. You qualify only where the lease agreement contractually obliges you (the lessee) to make the improvements, the property is used in the production of income in your (the lessee's) hands, and the value of the improvements is included in the lessor's gross income under paragraph (h) of the definition of "gross income". The qualifying cost is then deducted on a straight-line basis spread over the period of use or occupation of the lease (including any renewal or extension period) or 25 years, whichever is shorter, starting from the date the improvements were completed (not the date you signed the lease). The annual deduction is apportioned for part-years against your financial year end, and the claim is capped at the amount stipulated in the lease (or, where no amount is stipulated, the fair and reasonable cost). If the lease ends early, you may deduct the remaining undeducted balance in the year the lease terminates. There is no percentage rate and no link to wear-and-tear under s11(e); the spread is purely a function of your lease term.
Section 11(g) has no percentage rate and no fixed Rand thresholds. The allowance is a straight-line spread of your actual qualifying improvement cost, so the figures come from your lease, not from a SARS rate table.
| Rule | s11(g) treatment |
|---|---|
| Deduction period | Spread over the period of use or occupation (including any renewal/extension) or 25 years, whichever is shorter, from improvement completion date |
| Annual allowance | Total qualifying cost ÷ months in the spread period (apportioned for part-years) |
| Cap | The amount stipulated in the lease (or fair and reasonable cost if none stipulated) |
| Qualifying conditions | Contractual obligation to improve; property used in the production of income in the lessee's hands; improvement value included in the lessor's gross income (para (h)) |
| Early lease termination | Undeducted balance deductible in the year the lease ends |
No 2027-tax-year-specific bracket, rebate or threshold figures apply to this calculator.
2027 tax year (1 March 2026 – 28 February 2027), illustrative. A business leases a shop on a 10-year lease that obliges it to fit out the premises. It spends R600,000 on improvements, completed on 1 March 2026, and the lease stipulates improvements of up to R600,000. The lease (10 years) is shorter than 25 years, so the R600,000 is spread over 120 months = R5,000 per month. With a February year end, the 12 months from March 2026 to February 2027 give a R60,000 s11(g) deduction for the 2027 tax year, repeating each year until the cost is fully deducted. Had the lease been 30 years, the spread would cap at 25 years (300 months = R2,000/month).
Section 11(g) lets a lessee deduct the cost of improvements it is contractually obliged to make to a rented property used in producing its income. Instead of a once-off deduction, the cost is spread on a straight-line basis over the lease period (capped at 25 years) from the date the work is completed.
Yes. A core requirement of section 11(g) is a clear contractual obligation in the lease to effect the improvements. If the lease merely grants you the right or permission to improve, without compelling you to, SARS will disallow the s11(g) allowance, even though you spent the money.
The allowance is spread on a straight-line basis over the lease's period of use or occupation (including any renewal or extension) or 25 years, whichever is shorter, from the date the improvements are completed. So a 10-year lease spreads over 10 years; a 40-year lease is capped at 25 years. Part-years are apportioned.
Yes. Your total claim cannot exceed the amount of improvements stipulated in the lease agreement. If you spend more than the stipulated amount, the excess is voluntary expenditure and is not deductible. Where the lease stipulates no amount, the cap is the fair and reasonable cost of the improvements.
If the lease is terminated before the improvement cost is fully deducted, you may claim the remaining undeducted balance as a deduction in the year the lease ends. This prevents you from losing the unclaimed portion of your qualifying improvement expenditure.
Yes. For the lessee to claim s11(g), the value of the improvements must be included in the lessor's gross income under paragraph (h) of the "gross income" definition in section 1(1). The lessor may then claim its own relief allowance under section 11(h). If the value is not income in the lessor's hands, the lessee cannot claim.
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