Buying a flat to let

The_Ogre

The_Ogre

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As the title states. How would tax work, considering I'm employed fulltime and paying PAYE?
 
The_Ogre said:
As the title states. How would tax work, considering I'm employed fulltime and paying PAYE?
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You would pay tax or get a deduction benefit. You have revenue less expenses like interests on your bond, maintenance, etc.
 
Probably no tax payable, since it's very hard to make money doing BTL these days. The main aim is capital appreciation, and in SA you're not going to get that either, so probably also no CGT to pay.
 
You pay tax on the income you receive.
You can deduct expenses like maintenance, agency fees, interest on bond etc
 
WAslayer said:
Are you even sober for long enough periods of time to properly do anything remotely as complex as this..?
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For a retard like you everything is complex. Would you please help me with maintenance?
 
The_Ogre said:
As the title states. How would tax work, considering I'm employed fulltime and paying PAYE?
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You would effectively add the profit on the rental flat to your salary etc, and pay tax on that.

If you make a loss.... I'm not sure. It could be "ring fenced" and deducted from future profits, or it could be deducted from your salary etc.

I suggest you get a tax consultant. The amount you pay them is an expense on the property and can be deducted from your rental income.
 
The_Ogre said:
As the title states. How would tax work, considering I'm employed fulltime and paying PAYE?
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As per my understanding, net amount that you effectively get would be taxed at your tax bracket rates. You arrive at your net by deducting things like home loan interest, home loan account fees, admin/agent fees, coj rates, levy, any repairs etc..

Someone mentioned ring fencing loss so check this one. https://www.taxtim.com/za/tax-guides/chats/do-i-need-to-ring-fence-loss
 
So, did you go for it yet @The_Ogre ? . I am having my yearly dilemma. I call it my mid-life crisis although it seems to happen every year :ROFL::laugh::ROFL::laugh:
 
surface said:
So, did you go for it yet @The_Ogre ? . I am having my yearly dilemma. I call it my mid-life crisis although it seems to happen every year :ROFL::laugh::ROFL::laugh:
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No, not yet. I first need to finalise the sale of my house. My lease where I'm currently renting is expiring next month, so I actually need to inform the agent that I need to extend it for another 6 months.

When I made this thread I was one month into my 6 month lease because I thought by now I'd have sold the house and have the deposit already. Nope.
 
We bought a Flat in 2020 (pre-covid) to be built and rented out.

Covid came, and we had to take ownership a month after lockdown. Construction was back up as "essential services" but "rentals and moving" was not yet allowed. Bad scenario, but we ended up having to pay 2 or 3 months Bond repayments, before we could get tenants. Is what it is though.

Be sure to do your homework on proposed rental for the flat upfront. Don't believe the developer if that is what you intend doing.

I submit my annual tax return with a P&L statement of the flat. You can deduct things like Agent fees, Levies, Rates and also the interest and Bank charges on your bond.

Then you have either a Profit or a loss that gets added to your annual Taxable income. The ring fencing is only mandatory if you fall into the top tax bracket (45%). Otherwise your annual taxable income can be reduced by the loss of your rental property.
 
franshorn said:
We bought a Flat in 2020 (pre-covid) to be built and rented out.

Covid came, and we had to take ownership a month after lockdown. Construction was back up as "essential services" but "rentals and moving" was not yet allowed. Bad scenario, but we ended up having to pay 2 or 3 months Bond repayments, before we could get tenants. Is what it is though.

Be sure to do your homework on proposed rental for the flat upfront. Don't believe the developer if that is what you intend doing.

I submit my annual tax return with a P&L statement of the flat. You can deduct things like Agent fees, Levies, Rates and also the interest and Bank charges on your bond.

Then you have either a Profit or a loss that gets added to your annual Taxable income. The ring fencing is only mandatory if you fall into the top tax bracket (45%). Otherwise your annual taxable income can be reduced by the loss of your rental property.
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I'm defintely not in the top tax bracket!

If I get prime, I'd be looking at around R13k bond repayments. The unit that I'm currently renting is R8 250, so that's quite a loss that I'll be running for a few years.

Not sure I mentioned it, but I'm planning to buy in the same complex I'm currently renting in.
 
The_Ogre said:
I'm defintely not in the top tax bracket!

If I get prime, I'd be looking at around R13k bond repayments. The unit that I'm currently renting is R8 250, so that's quite a loss that I'll be running for a few years.

Not sure I mentioned it, but I'm planning to buy in the same complex I'm currently renting in.
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Make sure you'd be able to cover the bond if the unit lies empty for a few months.

I would downscale to a 1|2 bedroom to create that buffer...
 
The_Ogre said:
I'm defintely not in the top tax bracket!

If I get prime, I'd be looking at around R13k bond repayments. The unit that I'm currently renting is R8 250, so that's quite a loss that I'll be running for a few years.

Not sure I mentioned it, but I'm planning to buy in the same complex I'm currently renting in.
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Pm me! Will give you the secrets of renting (for free)! Lets get you to money angels
 
The_Ogre said:
I'm defintely not in the top tax bracket!

If I get prime, I'd be looking at around R13k bond repayments. The unit that I'm currently renting is R8 250, so that's quite a loss that I'll be running for a few years.

Not sure I mentioned it, but I'm planning to buy in the same complex I'm currently renting in.
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So, you will be renting after you buy the unit and hoping to nullify your rent with rental income ? You still have to pay levies (and rates and/or water) for the bought unit so consider that in calculation.
 
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