TAXATION OF RENTAL INCOME
02-02-2017

Many people are making money via online platforms which allow them to list and earn rental income from rooms, apartments and other forms of dwellings. In particular, Airbnb has blossomed globally, and an increasing number of South Africans are earning extra income by renting out their homes in this way.

Just as any other rental income is taxable, rental income earned through these online platforms is regarded as taxable income.

According to SARS, the rental of residential accommodation includes:

· holiday homes

· bed-and-breakfast establishments

· guesthouses

· sub-renting part of your house e.g. a room or a garden flat

· dwelling houses and

· other similar residential dwellings

Rental income should be added to any other taxable income that you may have. In addition to the regular monthly rental income, any other amount paid to you is also subject to income tax. These additional amounts or lease premiums are usually paid in the form of lump sums at the start of the lease and the full amount is then subject to tax in the year that it is received.

A refundable deposit paid by a tenant is not taxable as long as it is held separately in a trust account.

Rental income may be reduced by the expenses incurred during the period in which the property was let. These expenses must relate directly to the production of the rental income.

Expenses that may be deducted from taxable income include:

• rates and taxes

• bond interest

• advertising

• agency fees of estate agents

• insurance

• garden services

• repairs in respect of the area let

• security and property levies

It is important not to confuse the cost of repairs and maintenance with improvement costs (capital expenditure). Capital and/or private expenses are not allowable as a deduction.

Airbnb is legally obliged to supply details of the earnings of Airbnb hosts to the tax authorities, so it is important that you keep sufficient records to demonstrate that you have declared all income received and to substantiate expenditure claimed.