What property investors can and can’t claim during tax season
Whether it’s a guesthouse or a holiday home - there are many different tax deductions that you can access when you invest in rental property. With tax season upon us, we take a closer look at the range of deductions and how they can benefit your tax returns.
What property investors can and can’t claim during tax season
If you’ve just purchased an investment property or are exploring property for sale in Centurion and surrounds, you need to understand how it will affect your tax returns and what you are entitled to claim for. The reason investment properties investment property is a very popular investment option is that they provide a range of tax benefits and bring you large financial rewards.
Tax benefits on home ownership expenses apply specifically to second homes bought for investment and the buy-to-let market. These include holiday homes, bed-and-breakfast establishments, guesthouses, sub-renting part of your house e.g. a room or a garden flat and dwelling houses. Expenses that you may claim back from the taxman are rates and taxes, bond interest, advertisements, collection fees of estate agents managing the property, insurance (only homeowners not household contents), garden services, repairs in respect of the area let and security and property levies.
If you want to claim the costs of repairs to your home, these expenses have to relate directly to wear and tear of the property, and not for aesthetic improvements. You cannot deduct the cost of improvements such as fitting in new tiles and cupboards against rental income received as these expenses are capital in nature and are part of the base cost of owning the property.
Being a property investor is a considerable financial move, but, if managed wisely, the tax benefits can help you build wealth so that you can achieve a future of greater financial independence.
