Rental income primary residence?

[RVQ]

Hi Guys,

I'm considering renting out my house and moving into a smaller place much closer to work.

What are the tax implications of renting out a primary residence?

Regards

 

[heartbroken]

Hi Guys,

I'm considering renting out my house and moving into a smaller place much closer to work.

What are the tax implications of renting out a primary residence?

Regards

If you're not staying in the place, it won't be considered as your primary residence anymore. Then it becomes either investment or rental stock. You declare all the income made from the rental as well as expenses such as rates and taxes on your efiling. You get taxed on the profits.

 

[ToxicBunny]

SARS have also become good at ringfencing stuff like that from what I know... so if you make too big of a loss, they will potentially ringfence it and it won't benefit you tax wise.

 

[Just_Ice]

When you sell the property you will only be entitled to offset a pro-rata portion of the capital gain (for which you were primarily resident) against the primary residence exclusion of Rm2.
The rest will be subject to normal CGT.

The rentals will be subject to tax as usual, and then you will be allowed to set off relevant expenses against that income.
So long as it is rented to a 3rd party, and not a connected person, I dont imagine you will have a problem with it being ring fenced/

 

[Macethy]

When you sell the property you will only be entitled to offset a pro-rata portion of the capital gain (for which you were primarily resident) against the primary residence exclusion of Rm2.
The rest will be subject to normal CGT.

The rentals will be subject to tax as usual, and then you will be allowed to set off relevant expenses against that income.
So long as it is rented to a 3rd party, and not a connected person, I dont imagine you will have a problem with it being ring fenced/

Yeah the loss of the "primary residence" allowance for CGT is a huge factor you should consider if you ever sell that house, especially if you bought it many years ago.

 

[phoneJunky]

SARS have also become good at ringfencing stuff like that from what I know... so if you make too big of a loss, they will potentially ringfence it and it won't benefit you tax wise.

Isn't that also only when you are in the highest tax bracket?