If you are an individual and rent out a property (or a portion of a property) for residential or commercial purposes, the amount of income you receive from the lease will be subject to tax. Residential accommodation includes:
- holiday homes
- bed-and-breakfast establishments
- guesthouses
- renting a section of your home, e.g., a room or a garden flat and
- Airbnb.
The rental income you receive from renting out your property may be reduced by certain permissible expenses, which include:
- Rates and taxes;
- Levies;
- Interest on mortgage or bond;
- Agency fees of estate agents;
- Advertising expenses;
- Insurance;
- Cleaning services;
- Gardening services;
- Repairs and maintenance; and
- Internet services.
It is important to note that you may only claim 100% of these expenses if 100% of the property is rented out. In other words, if you are only renting out a section of your home, for instance, a room with an ensuite bathroom and kitchenette, you need to apportion the permissible expenses in relation to the area being rented out in m2 over the total area of your home in m2.
You may not deduct expenses of a capital nature from your rental income. These can include costs for improvements made to the property, which differ from costs for repairs and general maintenance.
For more information, see the Q&A on rental income: https://ajmtax.co.za/taxation-of-rental-income-qa/