South Africa: Taxes and Costs
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Rental income tax is high
Effective Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 7.2% | 15.8% | 20.1% |
| Click here to see a worked example | |||
Source:
Disclaimer |
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Income Tax
Non-residents are taxed only on their South African-sourced income. They pay income tax at the same rates, and are entitled to the same allowable deductions and rebates as residents, Interest payments, insurance premiums, agents commission, and maintenance costs are deducted from the rental income.
Married couples are assessed and charged as separate individuals. If the property is considered part of the conjugal estate, income is divided between husband and wife in equal portions.
Rental income less the allowable deductions is subject to the following tax rates, which apply for the tax year March 31, 2006 - February 28, 2007.
INCOME TAX |
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| TAXABLE INCOME, ZAR (US$) | MARGINAL TAX RATE |
| Up to 100,000 (US$14,265) | 18% |
| 100,001 160,000 (US$22,824) | 25% on band over US$14,265 |
| 160,001 220,000 (US$31,384) | 30% on band over US$22,824 |
| 220,001 300,000 (US$42,796) | 35% on band over US$31,384 |
| 300,001 400,000 (US$57,061) | 38% on band over US$42,796 |
| Over 400,000 (US$57,061) | 40% on all income over US$57,061 |
| Source: Global Property Guide | |
For individuals below 65 years of age, the tax threshold is ZAR40,000 (US$5,706) while the tax rebate is ZAR7,200 (US$1,027). Tax threshold and tax rebates for individuals over 65 years of age are set at ZAR65,000 (US$9,272) and ZAR11,700 (US$1,669), respectively.
Property Tax
Property tax is imposed by the local government at approximately 0.07% - 0.4% of the market value of the property, depending on its size and location.
Capital Gains Tax
Non-residents 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 ZAR12,500 (US$1,783) is subtracted. 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.
South Africa - more data and information
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