Rental Income Tax South Africa: A Comprehensive 2025 Guide
Rental income is a key source of revenue for many property owners in South Africa. However, it is subject to taxation by the South African Revenue Service (SARS).
This guide provides a detailed overview of rental income tax in South Africa for 2025, including tax obligations, deductions, calculations, and compliance requirements.
Understanding Rental Income Tax
What is Rental Income?
Rental income refers to the income earned from leasing out a residential or commercial property. It includes payments for:
- Monthly rent
- Lump-sum lease premiums
- Non-refundable deposits
- Lease consideration for furniture, fixtures, or additional services
All rental income must be declared to SARS, regardless of whether it is from local or international tenants.
Is Rental Income Taxable?
Yes, rental income is considered taxable in South Africa. Landlords must declare their rental earnings in their annual income tax return (ITR12) and pay the applicable tax based on their total taxable income.
Rental Income Tax Calculation
Tax Rates for Individuals (2025)
Rental income is taxed as part of an individual’s total taxable income at the following progressive rates:
Taxable Income (ZAR)Tax Rate (%)
1 – 237,100 18%
237,101 – 370,500 26%
370,501 – 512,800 31%
512,801 – 673,000 36%
673,001 – 857,900 39%
857,901 – 1,817,000 41%
1,817,001+ 45%
For companies, rental income is taxed at a flat corporate tax rate of 27%.
Taxable Rental Income Formula
The taxable rental income is calculated as: Total Rental Income – Allowable Expenses = Taxable Rental Income
Allowable Deductions & Expenses
Landlords can deduct legitimate expenses from their rental income before taxation. Some allowable deductions include:
Maintenance and Repairs
- Painting
- Plumbing
- Electrical repairs
- Roofing repairs
Municipal Costs
- Water
- Electricity
- Sewerage
- Refuse removal
Interest on Bond
Interest paid on the mortgage bond used to acquire the rental property is tax-deductible.
Agent Commission & Advertising Costs
- Estate agent commission
- Online and print advertising expenses
Insurance
- Homeowner’s insurance
- Landlord insurance
Security Costs
- Armed response
- Security systems
- Fencing and burglar proofing
Depreciation (Wear and Tear)
Landlords can claim depreciation on furniture and appliances provided to tenants.
Tax Compliance and SARS Submission
Declaring Rental Income
Rental income must be declared in the ITR12 tax return under the “Local Business, Trade, and Professional Income” section.
Tax Return Deadlines (2025)
SARS deadlines depend on how tax returns are filed:
- Provisional taxpayers (Self-employed landlords): 31 January 2026
- Non-provisional taxpayers (Salaried landlords): 30 November 2025
Provisional Tax for Landlords
Landlords earning substantial rental income may need to register as provisional taxpayers and pay tax in two installments (August and February).
Tax Exemptions & Special Considerations
Rental Income Below Tax Threshold
If your total taxable income (including rental income) is below ZAR 95,750 (under 65 years), you are not liable to pay tax.
Renting Out a Primary Residence
If you rent out part of your primary residence, only the rental portion is taxable. Expenses must be apportioned accordingly.
Airbnb & Short-Term Rentals
Income from Airbnb and other short-term rental platforms is taxable and should be declared to SARS.
Penalties for Non-Compliance
Failure to declare rental income may result in:
- Penalties and fines
- Backdated taxes
- Legal action
SARS conducts audits and matches property ownership records with tax declarations to identify undeclared rental income.
How to Reduce Rental Income Tax Legally
- Keep detailed records of all rental transactions and expenses
- Claim all legitimate deductions
- Consider forming a company for rental income if multiple properties are owned
- Consult a tax professional for tax-efficient strategies
Frequently Asked Questions (FAQ)
Do I have to pay tax on rental income if I am unemployed?
Yes, rental income is considered taxable regardless of employment status. However, if your total income (including rental income) is below the tax threshold, you may not owe any tax.
What happens if I forget to declare my rental income?
Failure to declare rental income can result in penalties, backdated taxes, and even legal consequences. SARS actively audits property owners to identify undeclared rental income.
Can I deduct my full bond repayment as an expense?
No, only the interest portion of the bond repayment is tax-deductible. The capital portion is not considered an expense.
How do I apportion expenses if I rent out only part of my home?
You should apportion expenses based on the percentage of the property being rented out. For example, if you rent out 30% of your home, only 30% of related expenses can be deducted.
Are levies and body corporate fees tax-deductible?
Yes, levies and body corporate fees for sectional title properties are deductible expenses.
How do I declare rental income from Airbnb?
Airbnb income must be declared as rental income on your tax return. Keep records of bookings and associated expenses.
Do I need to register for VAT if I earn rental income?
Generally, residential rental income is exempt from VAT. However, if you rent out commercial property and earn more than R1 million per year, you must register for VAT.
What proof do I need for rental income tax deductions?
You need proper documentation such as invoices, receipts, bank statements, and lease agreements to support your deductions.
Useful Links
Conclusion
As a South African landlord, it is essential to comply with SARS regulations regarding rental income tax.
Understanding tax obligations, allowable deductions, and submission requirements can help you reduce tax liabilities and avoid penalties.
Ensure accurate record-keeping and seek professional tax advice for optimized tax planning.
For more information, visit the official SARS website (www.sars.gov.za) or consult a tax expert.
Membership with the South African Landlords Association provides access to expert advice, legal resources, and a community of like-minded professionals.
Enhance your rental management experience and protect your investments by joining today!
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Disclaimer:
This post is for general use only and is not intended to offer legal, tax, or investment advice; it may be out of date, incorrect, or maybe a guest post. You are required to seek legal advice from a solicitor before acting on anything written hereinabove.
