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Jul 22, 2014

Rental income tax is high


INDIVIDUAL TAXATION

Nonresidents are taxed only on their South African-sourced income. Married couples are assessed and charged as separate individuals. If the property is considered part of the conjugal estate, income is divided between husband and wife in equal portions.

The tax year is from 01 March of the current year to 28 February of the succeeding year. The tax year 2013-2014 is from 01 March 2013 up to 29 February 2014. The tax year 2014-2015 is from 01 March 2014 up to 28 February 2015.

INCOME TAX

Income realized by nonresidents is taxed at progressive rates. The following tax rates apply for the tax year March 2012 – February 2013.

INCOME TAX 2014-2015

TAXABLE INCOME, ZAR (US$) TAX RATE
Up to 174,550 (US$16,237) 18%
174,550 – 272,700 (US$25,367) 25% on band over US$16,237
272,700 – 377,450 (US$35,112) 30% on band over US$25,367
377,450 – 528,000 (US$49,116)

35% on band over US$35,112

528,000 – 673,100 (US$62,614) 38% on band over US$49,116
Over 673,100 (US$62,614) 40% on all income over US$62,614
Source: Global Property Guide

INCOME TAX 2013-2014

TAXABLE INCOME, ZAR (US$) TAX RATE
Up to 165,600 (US$15,405) 18%
165,600 – 258,750 (US$24,070) 29% on band over US$15,405
258,750 – 358,110 (US$33,313) 30% on band over US$24,070
358,110 – 500,940 (US$46,599)

35% on band over US$33,313

500,940 – 638,600 (US$59,405) 38% on band over US$46,599
Over 638,600 (US$59,405) 40% on all income over US$59,405
Source: Global Property Guide

RENTAL INCOME
Rental income is taxed at progressive rates. Interest payments, insurance premiums, agent’s commission, and maintenance costs are deducted from the rental income.

CAPITAL GAINS
South African homesNonresidents are liable to Capital Gains Tax (CGT) on the disposal of property in South Africa. CGT effective from 1 October 2001 is added to the taxable income, and is subject to the progressive income tax rates.

To compute the gain, acquisition costs, transfer costs, and property improvement costs are deducted from the selling price. A further allowable annual deduction of is subtracted. The annual deduction is ZAR30,000 (US$2,791) for tax year 2013-2014, and for tax year 2014-2015.The taxable gain is 25% of the resulting amount.

The disposal of property is assumed on death or emigration, and triggers the payment of CGT.

PROPERTY TAXATION


INCOME TAX

Income and capital gains earned of companies are subject to corporate income tax at a flat rate of 28%. In calculating taxable income, income-generating expenses are deductible from the gross income.






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