Pay Less Tax on your rental property

According to Paying Less Tax Made Simple 2011 by Ralf Metz, available from bookshops, Sars only allows you to deduct the following deductions against your rental income:

• "The interest on your mortgage bond or loan raised against the property;

• Rates and taxed;

• Insurance;

• Repairs and maintenance costs provided the property is in a lettable condition to start with and you entered into a lease agreement which requires you to make the repairs;

• Expenses incurred on the treatment of any timber against attack by beetles (this does not include sound-proofing against attack by The Beatles);

• Advertising;

• The cost of commission and rent collections;

• Electricity and water; and

• Depreciation of furniture if the property is let fully furnished."

The cost of improvements, reconstructions or additions to the property cannot be deducted as these expenses are of a capital nature, says Metz. Neither will a deduction be allowed for repairs, says Metz, if you repair a property which was previously let and which you now want to occupy and sell. To get a deduction you will need to make the repairs while your property is being occupied for trade, adds Metz.

Also worth noting is that there is a very fine line of distinction between repairs and maintenance on the one hand and improvement and reconstruction on the other. Each case will be assessed on its merits.