Anyone who needs TAX / Accounting Advice

[Andromeda]

You, in your personal capacity, would claim the interest on mortgage as an expense against the loan interest received. Presumably they would equate each other.

[IanW]

You, in your personal capacity, would claim the interest on mortgage as an expense against the loan interest received. Presumably they would equate each other.

Thank you for the response, is there any article you can direct me to that would support this?

[GBotha]

Good morning Itai

I am interested in property investment and would like to purchase property to rent out. A standard deal would include Rates & taxes, Levies, and my bond repayment as expenses and then the rent as income. If an example deal looks as follows:
Bond repayment = R7100
R&T = R300
Levies = R1320
Rental income = R7200
Cash flow = - R1520
How would tax work on this, will any of this be tax deductible? Would there be any benefits from a tax point of view or will it only stay a loss?

Thank you

[EAB]

Good morning GBotha,

The R&T and Levies will be tax deductible in full. Only the interest portion will be tax deductible, not the full bond payment.

The loss can be deducted from your taxable income when calculating your income tax for the year. Just keep in mind that SARS can ring-fence the losses in some cases based on your personal tax profile.

[GBotha]

Good morning GBotha,

The R&T and Levies will be tax deductible in full. Only the interest portion will be tax deductible, not the full bond payment.

The loss can be deducted from your taxable income when calculating your income tax for the year. Just keep in mind that SARS can ring-fence the losses in some cases based on your personal tax profile.

Just as a follow ups to the answer you provided:
R&T and Levies deductible in full means that if I spend R1600 monthly on that, I can claim R19200 from SARS if a full year of payments were observed?

If for the first year R4000 of my bond repayment was paid towards the interest, I can claim that from SARS as well? R4000*12 = R48 000.

If those expenses are all claimed from SARS and my effective bond repayment is only R3100 (R7100-R4000), does the R7200 from rental income gets seen as positive cash flow after all of these deductions? (R7200 - R3100 = R4100) Will that amount then be taxable?

Thank you for taking time to answer these questions. I don't think I have a very good understanding on this, but your help is much appreciated.

[Andromeda]

Hi Gbotha

Try to forget about cash flow; income and expenses are what matters.

You are taxed on all income less all expenses incurred in producing that income.

So,
Income = R86,400
Rates = -R3,600
Levies = -R15,840
Bond Interest (assume) = -R48,000
Taxable Income = R18,960

Some things to note:
Bond interest will reduce every month. The finance institution must provide you with a tax certificate each year.
At some point you will incur other related expenses, repairs & maintenance, insurance and there may be others.

Also bear in mind that if you are married in community of property then the profit or loss on the activity should be halved.

If there is a net income amount, it will be added to your other income and taxed together. If the other way round it is deducted from your taxable income, but bear in mind that it may be ring fenced depending on your particular circumstances.

[Frad]

Hello Itai , Are you able to teach here ? if I sold 6 shares on the JSE this tax year , I made a loss of R 18,000 , Do i need to fill this loss in my tax return and can this loss be carried over to the next tax year return and be taken off gains if I made any? They are not subject to CGT . Where do I enter this in my Tax Return ? Many Thanks Frad

[teefire]

Hi eitai

I really hope you can help!

I desperately need advice on how best to do my tax returns such that I can get refund from SARS. Each time I do my returns I end up owing SARS.

My travel allowance is structured at R5000 per month.

How many kilos do I have to travel in order to get a refund or AT LEAST not end up owing SARS?

I would really appreciate your help and assistance

[fredie88]

Does an Independent Contractor get Substance and Travel Allowance?

From a tax point of view, by my understanding you can claim actual costs incurred in the generation of income.

Allowances are largely for employees, although there are exceptions. For example, if you attend a conference overseas for business purposes you may claim a daily subsistence allowance.