Tax from rental income query

S

spokie1

New Member
Joined
Jan 14, 2011
Messages
3
Reaction score
0
Been wondering if there is someone that can help me with this query. I've recently bought a house and plan on moving there from my flat. My flat is paid off and the unfortunatly the bond has been closed. As I understand it, SARS will be taxing me quite badly on the rental income that I'll be recieving. If I had a bond, I could have subtracted that from tax, but like I said, it has been closed.

My question is, if I reopen the bond can I deduct that from my tax? I know that you can deduct your bond payback, but is it ok if I reopen if for that specific purpose?

Any help would be greatly appreciated. :)
 
SARS only allows deduction of the interest portion of repayment as an expense, and only on financing to specifically acquire a income earning asset. In your instance the asset has already been acquired and settled so reopening the bond will not result in a deductable expense.

dont forget all possible decductions, includes rates/taxes, levies, maintenance, cost of sourcing tenant, agent costs etc etc. The balance of income is added to your annual income and taxed at your marginal rate.
 
Last edited:
Smurfatefrog said:
+1

It would be rather pointless to willingly pay interest on a bond & then get to save about a 3rd of it in tax
Click to expand...

Not if he uses the money he gets from the flat bond to pay off his primary residence bond.

spokie1, you should speak to your accountant. If he thinks you can get away with it, go for it, but I think it's a bit of a risk, especially when the bond registration date is a few years after you bought the property.
 
I'm in the situation exasctly and I was advised to do the same as what drunkard said.

I'm reopening the bond on the second property to finance my primary propery - and deducting the bond from income tax.
 
Thanks for all the replies. I'll try to get some advice from an accountant and hear what they have to say. I however suspect that it would work the same way as described by etwylite.

I might even try and get a response from SARS on the subject, but won't be holding my breath for that. Once I have some answers I'll post it here.

Thanks.
 
Deducting interest from taxable income

spokie1 said:
Thanks for all the replies. I'll try to get some advice from an accountant and hear what they have to say. I however suspect that it would work the same way as described by etwylite.

I might even try and get a response from SARS on the subject, but won't be holding my breath for that. Once I have some answers I'll post it here.

Thanks.
Click to expand...

Hi spokie1
Did you get any answers?
I would also like to know whether doing this is allowed or not?
Thanks
 
Drunkard #1 said:
spokie1, you should speak to your accountant. If he thinks you can get away with it, go for it, but I think it's a bit of a risk, especially when the bond registration date is a few years after you bought the property.
Click to expand...
That would only happen if you took out a new loan. If the current one is still registered, but the account is dormant, it can be re-activated.
 
you cannot claim interest on the house against interest on the flat. that is illegal. you do not owe anything on the flat so in essence there is no bond repayments owing on the flat.
 
spokie1 said:
Been wondering if there is someone that can help me with this query. I've recently bought a house and plan on moving there from my flat. My flat is paid off and the unfortunatly the bond has been closed. As I understand it, SARS will be taxing me quite badly on the rental income that I'll be recieving. If I had a bond, I could have subtracted that from tax, but like I said, it has been closed.

My question is, if I reopen the bond can I deduct that from my tax? I know that you can deduct your bond payback, but is it ok if I reopen if for that specific purpose?

Any help would be greatly appreciated. :)
Click to expand...

Why do they need to know you're getting a rental income :) Ask for cash :D
 
noxibox said:
Why not quote the relevant section of the tax law for us?
Click to expand...


mods/admins please close any further threads that anyone starts with rental income. i have gone over this with the members of this forum for over 2 years now and i am no longer going to tolerate the imbecilic behavior from them. their unwarranted attacks on me is now getting beyond a joke and i will lash out like you cannot believe at the next person who tries to get clever and asks me to quote the relevant section of the act. i have explained this in detail to the members here and if they want to act like morons then they must go to a tax consultant and pay for their services!!!!!
 
In other words no you don't have anything to back up your claim.

Celine said:
mods/admins please close any further threads that anyone starts with rental income. i have gone over this with the members of this forum for over 2 years now and i am no longer going to tolerate the imbecilic behavior from them. their unwarranted attacks on me is now getting beyond a joke and i will lash out like you cannot believe at the next person who tries to get clever and asks me to quote the relevant section of the act. i have explained this in detail to the members here and if they want to act like morons then they must go to a tax consultant and pay for their services!!!!!
Click to expand...
You think you know everything about tax, regularly demonstrate this is not the case, then throw a tantrum when called on it.
 
wow, if you have nothing to add and the questions upset you, don't comment. :confused:
 
noxibox said:
That would only happen if you took out a new loan. If the current one is still registered, but the account is dormant, it can be re-activated.
Click to expand...

Quite right.

Celine said:
you cannot claim interest on the house against interest on the flat. that is illegal. you do not owe anything on the flat so in essence there is no bond repayments owing on the flat.
Click to expand...

This seems to be a sore point for you, so I'll try be tactful (which isn't my normal method). I'm glad you're not my tax consultant. If I'm paying you, I want my tax bill as low as possible, not preaching about what is and isn't legal. My taxes support enough lazy, ANC voting, Eastern Cape grant recipients as it is, I don't need to support a dozen more because my accountant isn't on my side.
 
Drunkard #1 said:
Quite right.



This seems to be a sore point for you, so I'll try be tactful (which isn't my normal method). I'm glad you're not my tax consultant. If I'm paying you, I want my tax bill as low as possible, not preaching about what is and isn't legal. My taxes support enough lazy, ANC voting, Eastern Cape grant recipients as it is, I don't need to support a dozen more because my accountant isn't on my side.
Click to expand...

+1
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X