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Jul 06, 2015

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 2014-2015 is from 01 March 2014 up to 28 February 2015. The tax year 2015-2016 is from 01 March 2015 up to 29 February 2016.

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 2015-2016

TAXABLE INCOME, ZAR (US$) TAX RATE
Up to 181,900 (US$14,552)  18%
181,900 – 284,100 (US$22,728) 26% on band over US$14,552
284,100 – 393,200 (US$31,456) 31% on band over US$22,728
393,200 – 550,100 (US$44,008) 36% on band over US$31,456
550,100 – 701,300 (US$56,104) 39% on band over US$44,008
Over 701,300 (US$56,104) 41% on all income over US$56,104
Source: Global Property Guide

INCOME TAX 2014-2015

TAXABLE INCOME, ZAR (US$) TAX RATE
Up to 174,550 (US$13,964) 18%
174,550 – 272,700 (US$21,816) 25% on band over US$13,964
272,700 – 377,450 (US$30,196) 30% on band over US$21,816
377,450 – 528,000 (US$42,240)

35% on band over US$30,196

528,000 – 673,100 (US$53,848) 38% on band over US$42,240
Over 673,100 (US$53,848) 40% on all income over US$53,848
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 homesCapital gains realized from selling real property are subject to income tax at progressive 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$2,400). The taxable gain is 33.3% of the resulting amount.

The disposal of property is assumed on death or emigration, and triggers the payment of capital gains tax (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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