Rental Income Tax Calculator South Africa
Calculate tax on rental income under Section 25B — deduct bond interest, rates, levy, maintenance and agent fees. Includes IRP6 provisional tax calculator.
| Item | Monthly | Annual |
|---|---|---|
| Gross Rental Income | R 12 000 | R 144 000 |
| Rates & Taxes | R -800 | R -9 600 |
| Levy | R -1 200 | R -14 400 |
| Insurance | R -400 | R -4 800 |
| Maintenance | R -500 | R -6 000 |
| Agent Commission (8%) | R -960 | R -11 520 |
| Bond Interest | R -9 500 | R -114 000 |
| Net Rental Loss | R -1 360 | R -16 320 |
| Net After-Tax Cash | R -1 360 | R -16 320 |
Section 25B: How SARS Taxes Rental Income How to use • Section 25B • Example
How to Use This Calculator
Enter your gross monthly rental income and all allowable expenses under Section 25B of the Income Tax Act: municipal rates, body corporate levy, insurance, maintenance and repairs, agent commission, and the interest portion of your bond repayment (not capital).
Select your marginal tax rate — rental income is added to all your other taxable income and taxed at your highest bracket. The calculator shows net rental profit/loss, tax payable, and effective rate. The Provisional Tax tab calculates your IRP6 payments if you are a provisional taxpayer.
Section 25B: Income from Letting of Property
Under Section 25B of the Income Tax Act No. 58 of 1962, gross rental income is included in your taxable income in the year it is received or accrued. The following expenses are deductible (Section 11 and Section 24J):
- Municipal rates and taxes on the rental property
- Bond interest (not the capital/principal portion)
- Insurance premiums for buildings and landlord insurance
- Body corporate or HOA levies
- Repairs and maintenance to maintain the property (not improvements)
- Agent commission and management fees
- Advertising costs to find tenants
- Depreciation (wear and tear) on furniture and appliances in furnished lettings
Not deductible: Capital improvements (these are added to the base cost for CGT purposes), bond capital repayments, and personal costs.
Ring-Fencing of Rental Losses (Section 20A)
If your rental property makes a loss (expenses exceed income), Section 20A of the Income Tax Act may ring-fence those losses, preventing you from offsetting them against your salary. This applies to "suspect trades" which include buy-to-let property that shows losses for three or more consecutive years. Always consult a registered tax practitioner before offsetting rental losses.
Worked Example
Zanele rents out a property for R12,000/month gross. Her monthly allowable deductions: rates R800, levy R1,200, insurance R400, maintenance R500, agent fee 8% = R960, bond interest R9,500. Total deductions: R13,360/month.
Net rental: R12,000 − R13,360 = −R1,360/month loss. Section 20A ring-fencing may prevent this loss from offsetting her salary income.
If bond interest falls to R7,000/month (as balance reduces), net rental becomes positive at R1,140/month. At a 36% marginal rate, tax = R1,140 × 36% = R410/month on rental profit. Annual additional tax = R4,928. She must register as a provisional taxpayer and pay IRP6.
Frequently Asked Questions
How is rental income taxed in South Africa?
Rental income is taxed under Section 25B of the Income Tax Act as ordinary income. Net rental profit (after allowable deductions) is added to your other taxable income and taxed at your marginal rate, which ranges from 18% to 45% in the 2025/2026 tax year. Rental income must be declared on your ITR12 annual return, and you must register as a provisional taxpayer and submit IRP6 forms if your rental income exceeds R30,000 per year.
Can I deduct bond repayments on a rental property from tax?
Only the interest portion of your bond repayment is deductible under Section 24J of the Income Tax Act. The capital (principal) portion is not deductible. You can obtain a breakdown from your bank showing interest vs capital for each monthly payment. In the early years of a bond, interest is the majority of the repayment — for a 20-year bond at 10.25%, roughly 85% of the first year's repayments is interest.
What is provisional tax and do I need to pay it on rental income?
Provisional tax (IRP6) is a system where taxpayers who earn income beyond their salary (including rental income) make advance payments of tax during the tax year. If your rental income exceeds R30,000 per year, you must register as a provisional taxpayer on SARS eFiling. You make two payments per year — the first by 31 August (for the year ending February) and the second at year-end on 28 February. Underpayment of more than 10% triggers a 20% penalty.
What is the ring-fencing rule for rental losses in South Africa?
Section 20A ring-fencing prevents taxpayers from using losses from "suspect trades" (including letting of property) to reduce tax on their salary income. This typically applies if your rental property has generated losses for three or more consecutive years. SARS may disallow the set-off, meaning losses can only be carried forward to offset future rental profits from the same property. This is a complex area — consult a registered tax practitioner.
Do I pay CGT or income tax when I sell a rental property?
When you sell a rental property, the profit is subject to Capital Gains Tax (CGT), not income tax. The annual exclusion of R40,000 applies, but the primary residence exclusion of R2,000,000 does not apply to rental properties. CGT inclusion rate is 40% for individuals, meaning up to 18% effective CGT (45% × 40%). Improvements made to the property increase the base cost and reduce the capital gain. Declare it on your Schedule E with the ITR12.