Rental income tax in South Africa: every deduction landlords can claim
If you rent out property in South Africa, the profit is taxable — but a long list of running costs is deductible. Here's what you declare, what you can claim, and the records SARS expects.
Is rental income taxable?
Yes. Rental income is added to your other taxable income and declared in the local rental income section of your annual ITR12 return. You're taxed on the net figure: total rent received less the allowable expenses below. If expenses exceed income you have a rental loss, which may be offset against your other income — subject to the ring-fencing rules covered later.
What you can deduct (allowable expenses)
To be deductible, an expense must be incurred in producing the rental income and must not be capital in nature. The usual claims are:
- Bond interest — the interest portion of your monthly instalment (not the capital repayment).
- Municipal rates and taxes on the property.
- Levies — sectional-title or body-corporate / HOA levies.
- Insurance — buildings and (where relevant) contents cover for the let property.
- Repairs and maintenance — restoring the property to its original condition (see repairs vs improvements below).
- Managing-agent and letting commission.
- Advertising to find tenants.
- Security and monitoring costs.
- Garden services and cleaning between tenants.
- Accounting / admin fees directly related to the rental.
- Wear-and-tear on furniture and appliances for a furnished let.
What you cannot deduct
These are capital or private in nature, so they don't reduce your rental profit:
| Cost | Why not — and where it goes instead |
|---|---|
| Bond capital repayment | Capital — it reduces your debt, not your profit. Only the interest is deductible. |
| Improvements & additions | Capital — they add to your base cost for capital gains tax when you sell. |
| Transfer duty & purchase costs | Capital — part of base cost, not a running expense. |
| Your private-use portion | If you also live in / use the property, apportion and exclude the private share. |
Repairs vs improvements — the line that trips landlords up
This single distinction causes more SARS queries than almost anything else:
Repair → deductible now
Restores the property to its original condition. Replacing a broken geyser with a similar one, fixing a leaking roof, repainting after wear.
Improvement → capital
Makes the property better, bigger or new. Adding a room, installing solar, converting a garage. Not deductible — it lifts your base cost for CGT.
Ring-fencing of rental losses (section 20A)
If your rental runs at a loss and you're taxed at the highest marginal rate, that loss may be ring-fenced under section 20A — meaning it can only be set off against future rental income from the same property, not against your salary. Whether it applies depends on tests such as how many of the last five years showed a loss. If this might affect you, get a tax practitioner to check.
You may become a provisional taxpayer
Rental income isn't taxed via PAYE, so once it (with your other non-salary income) crosses the threshold you generally become a provisional taxpayer: you estimate and pay tax twice a year on an IRP6, then reconcile on your ITR12. Budgeting for this avoids a nasty assessment at year-end.
Keep your records — for five years
SARS can verify or audit a return, and the onus is on you to prove every claim. Keep invoices, slips, bond interest certificates, levy and rates statements, and lease agreements for at least five years from submission. Reconstructing a year of slips in an audit is where most of the deduction value is lost.
Mastendi keeps your IT12 audit-ready all year
Mastendi tags every expense to IT12-aligned categories, tracks the deductible bond-interest portion, lets you attach the slip to each cost, estimates your IRP6, keeps a capital-improvements register for CGT, and exports a downloadable audit-evidence pack — so tax season is a download, not a scramble. And we never take a cut of your rent.
Start your 14-day free trialFrequently asked questions
Is rental income taxable in South Africa?
Yes — net rental profit (income less allowable expenses) is added to your taxable income and declared in the local rental income section of your ITR12.
Can I deduct my bond repayment?
Only the interest portion. The capital repayment isn't an expense — it reduces your debt and is treated as capital.
Repair or improvement — which can I claim?
Repairs (restoring original condition) are deductible now. Improvements (better/bigger/new) are capital and add to your CGT base cost instead.
Do landlords pay provisional tax?
Usually, once rental and other non-salary income is above the threshold — via IRP6 twice a year, reconciled on the ITR12.
How long must I keep records?
At least five years from submission, in case SARS verifies or audits the return.
Disclaimer: This guide is general information for South African landlords and is not tax, legal or financial advice. Tax rules and thresholds change and depend on your circumstances. Verify the current position with SARS or a registered tax practitioner before acting.