When less than 100% of your property is being rented out, then you may only deduct a portion of your rental related expenses. This portion (i.e. percentage) is calculated by dividing the floor area of the space being rented, by the total floor area of the property (including garages and out buildings).
Here’s an example:
You have a 500 square metre, three-bedroom home which also has a separate flatlet which you rented out for 250 days of the tax year.
You will then take the total square meterage of the flatlet (let’s say this is 180 square metres) and divide that by the total of the house (include garage and outbuildings) to get the percentage.
Square meterage of flatlet/ total square meterage of property x 100
180 / 500 x 100 = 36%
Now that we have the percentage worked out, let’s say your rental income was R R250 000 in the last tax year. How much of your expenses can you deduct?
|
Expenses |
Total annual expenditure in tax year |
Allocated expense to the rental property (36%) |
|
Rates and taxes |
R 22 600 |
R 8 136 |
|
Interest on bond |
R 30 000 |
R10 800 |
|
Security |
R 6 000 |
R 2 160 |
|
Garden services |
R 30 000 |
R 10 800 |
|
Airbnb service fees * |
R 7 500 |
R 7 500 |
|
Property insurance |
R 12 000 |
R 4 320 |
|
Repairs & maintenance to flatlet * |
R 8 000 |
R 8 000 |
|
Total expenses |
R 116 100 |
R 51 716 |
*100% of these costs would be deductible.
The allocated expenses would then need to be pro-rated based on the days occupancy in a year, i.e. 250 days
Total rental expenses: R 51 716 x 250 / 365 = R 35 422
Net taxable rental income: R 250 000 – R 35 422 = R 214 578
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