Global Property Guide

Financial Information for the Residential Property Buyer


Rental income tax is high

Last Updated: January 08, 2018

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 2017-2018 is from 01 March 2017 up to 28 February 2018. The tax year 2018-2019 is from 01 March 2018 up to 28 February 2019.

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 2017-2018

TAXABLE INCOME, ZAR (US$) TAX RATE
Up to 189,880 (US$13,563) 18%
189,880 – 296,540 (US$21,181) 26% on band over US$13,563
296,540 – 410,460 (US$29,319) 31% on band over US$21,181
410,460 – 555,600 (US$39,686) 36% on band over US$29,319
555,600 – 708,310 (US$50,593) 39% on band over US$39,686
708,310 – 1,500,000 (US$107,143) 41% on band over US$50,593
Over 1,500,000 (US$107,143) 45% on all income over US$107,143
Source: Global Property Guide

INCOME TAX 2016-2017

TAXABLE INCOME, ZAR (US$) TAX RATE
Up to 188,000 (US$13,429) 18%
188,000 – 293,600 (US$20,971) 26% on band over US$13,429
293,600 – 406,400 (US$29,029) 31% on band over US$20,971
406,400 – 550,100 (US$39,293)

36% on band over US$29,029

550,100 – 701,300 (US$50,093) 39% on band over US$39,293
Over 701,300 (US$50,093) 41% on all income over US$50,093
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$2,143). 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.

 

Comments

prince | February 07, 2016

how do identified your rental income earners and the amount that their earner.

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