[Question] Capital Allowance as a deduction?

[anakin]

Hello there!

I'm self-employed (individual without any entity) and I'm still in progress of acquiring a property for rental income (additional income). I paid a deposit of R 60,000 (before income tax) one year ago and paid R 180,000 (before income tax) again a few months later. I took R 360,000 in bond (still pending for title registration from deeds office and it will be in my own name). I'm aware that I can claim rates, levies, maintenance (to its original state only), interests paid on bond and insurance as deductions but I'm wondering what the capital allowance is. I heard we can claim down payments as capital allowance should we still wait for the acquisition to complete (been waiting for 1 year already). Am I correct?

Should I rather keep the property separate to what I'm doing for living i.e. using taxed income instead of using pre-tax income to acquire the property for rental income? From my understanding, should I not fill in the above-mentioned amounts as capital allowance then the non-bond capital will not be taken into account and I would still need pay for the income generated, including the amounts used as down payments, anyway.

Thanks!

[CLIVE-TRIANGLE]

I assume it is a residential property? There are no allowances.

You are required to account for rent received, from which you can deduct all related expenses, including registration fees and interest charged by the bondholder.

The only other consideration is CGT if and when you sell it. Your base cost is the original cost on which transfer duty was calculated (even if nil), plus all improvements and debits not charged as expenses above. Your proceed will be what you sold it for it less all selling expenses.

If it's a commercial building it's a different story.