Results 1 to 7 of 7

Thread: Allowances on rental Property

  1. #1
    Junior Member
    Join Date
    Sep 2018
    Location
    gauteng
    Posts
    18
    Thanks
    1
    Thanked 1 Time in 1 Post

    Allowances on rental Property

    Hello

    My client bought a unit(brand new) from a body corporate for R2.5 million to rent to a tenant in 2014. Can he claim any sort of allowance. If so at what rate & how do we disclose it in his AFS? Is teher any Tax benefits?

  2. #2
    Platinum Member
    Join Date
    Oct 2008
    Location
    South Africa
    Posts
    1,496
    Thanks
    205
    Thanked 83 Times in 79 Posts
    Was it purchased in his personal capacity?

  3. #3
    Junior Member
    Join Date
    Sep 2018
    Location
    gauteng
    Posts
    18
    Thanks
    1
    Thanked 1 Time in 1 Post
    No! They formed a Company with 4 directors who are also the shareholders. The purpose of the company is for property . The unit is rented out (residential purposes) .It was bought from a body Corp.
    They have installed airconditioners & a wooden pantry .Both are more than R10 000.00 .TIA

  4. #4
    Gold Member
    Join Date
    Feb 2016
    Location
    Johannesburg
    Posts
    629
    Thanks
    59
    Thanked 181 Times in 161 Posts
    Hi Anu. There is no allowance.

    The company will be required to pay tax on it's profit, which is calculated by deducting allowable expenses from rent received.

    The air conditioner is a capital expense, so you cannot expense it. The wooden pantry is also a capital expense in that it is an improvement to the investment property.

  5. #5
    Platinum Member
    Join Date
    Oct 2008
    Location
    South Africa
    Posts
    1,496
    Thanks
    205
    Thanked 83 Times in 79 Posts
    Quote Originally Posted by Andromeda View Post
    Hi Anu. There is no allowance.

    The company will be required to pay tax on it's profit, which is calculated by deducting allowable expenses from rent received.

    The air conditioner is a capital expense, so you cannot expense it. The wooden pantry is also a capital expense in that it is an improvement to the investment property.
    Hey Andromeda, so in this case they would depreciate the air condition and pantry as assets?

  6. #6
    Gold Member
    Join Date
    Feb 2016
    Location
    Johannesburg
    Posts
    629
    Thanks
    59
    Thanked 181 Times in 161 Posts
    The air conditioner, in the AFS yes, and it is also subject to wear and tear.

    The pantry no. It is an improvement to the Investment Property. Investment Properties, which are held for rental and capital appreciation, are not depreciated and are also not subject to wear and tear for tax.

  7. Thanks given for this post:

    AmithS (27-Feb-19)

  8. #7
    Junior Member
    Join Date
    Sep 2018
    Location
    gauteng
    Posts
    18
    Thanks
    1
    Thanked 1 Time in 1 Post
    Thank you !

Similar Threads

  1. Loss on rental property - SARS refund?
    By mango in forum Accounting Forum
    Replies: 4
    Last Post: 22-Jun-18, 10:40 AM
  2. [Question] Pastel and Property Rental Business
    By surfgate in forum Accounting Forum
    Replies: 2
    Last Post: 29-Jan-14, 06:58 AM
  3. [Question] Accounting for rental guarantees in property development?
    By Edrich in forum Accounting Forum
    Replies: 2
    Last Post: 07-Dec-11, 09:35 PM
  4. [Question] PROPERTY RENTAL AGENCY SET UP
    By kmv in forum General Business Forum
    Replies: 1
    Last Post: 21-Jul-11, 08:06 PM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •