Tax on rental income explained

How it works

Rental income is not taxed separately. You add up the rent for the tax year (1 March to the end of February), subtract the deductible expenses, and the net amount (profit or loss) is added to your other income and taxed at your marginal rate. On the ITR12 you declare it in the rental section: SARS uses source code 4210 for a profit and 4211 for a loss. Spouses married in community of property declare the full amount, and SARS splits it 50:50 between them.

What you can deduct

A repair restores something to its previous condition (fixing a leaking geyser); an improvement makes it better than it was (adding a second bathroom). If you let a furnished property, you can claim a wear-and-tear allowance on furniture and appliances over their useful life.

Letting part of your home

If you let a cottage or a room, split shared costs by floor area. SARS’s example: a 120 m² flat in a 420 m² property means 28.57% of the rates, insurance and bond interest is deductible. Costs only for the let part, such as repainting the cottage, are deductible in full.

A worked example

You let a flat for R 9 000 a month (R 108 000 a year) and earn a salary with taxable income of R 450 000.

Your taxable income rises to R 463 080. That is all in the 31% bracket, so the extra tax is R 4 054.80, about 3.8% of the rent. If the bond interest had been R 80 000 instead, the flat would show a loss of R 12 920, which reduces your taxable income and saves about R 4 005 of tax on your salary.

Can a rental loss reduce tax on my salary?

Usually yes. A loss on a let property is set off against your other income in the same year. The exception is the “ring-fencing” rule in section 20A, which only applies if your taxable income before the loss is at least R 1 878 600 (the start of the top bracket in 2026/27) and either:

• you have made a loss from the letting in at least 3 of the last 5 years, or
• less than 80% of the residential accommodation is used by people who are not your relatives for at least half the tax year.

Even then the loss is not lost: it is carried forward against future rent from the same property. You can also escape ring-fencing by showing the letting has a reasonable prospect of making a profit within a reasonable time, but not once you have made a loss in 6 of the last 10 years.

Provisional tax

Earning rent usually makes you a provisional taxpayer, which means two payments a year (end of August and end of February) on top of your PAYE. You are exempt only if you don’t run a business and your taxable income is below the tax threshold (R 99 000 under age 65 in 2026/27), or your taxable income from interest, dividends, foreign dividends, rent and pay from an employer not registered for PAYE is R 30 000 or less for the year.

Airbnb and short-term letting

The same income tax rules apply: declare the income and claim the costs, apportioned for any time you use the property yourself. VAT is different. Long-term residential rent is exempt from VAT, but short-term guest accommodation is a VAT supply. From 1 April 2026 you must register for VAT once your taxable supplies exceed R 2.3 million in 12 months (up from R 1 million).

When you sell

A rental property gets no primary residence exclusion (or only a share, if you also lived in it), so the gain is subject to capital gains tax. Improvements add to its base cost; repairs you already deducted do not. See the capital gains tax guide.

Records to keep

Keep the lease, rent statements, bond interest certificates, levy and rates statements, invoices and bank statements for five years from the date you submit the return. SARS often asks landlords to support a loss.

Frequently asked questions

Do I pay tax on rental income in South Africa?

Yes, on the net amount after deductible costs, at your marginal income tax rate. It is declared on your annual return.

Can I deduct my bond repayment from rental income?

Only the interest part, not the capital part, and only the share that relates to the let property.

Do I charge VAT on rent?

Not on long-term residential rent, which is exempt. Short-term accommodation is subject to VAT once you pass the R 2.3 million registration threshold.

Is a room in my house rental income?

Yes. You declare the rent and can deduct the share of costs that relates to the room, usually by floor area.

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