Rental Income Tax in South Africa: SARS Guide for Landlords 2026

If you earn rental income in South Africa, SARS considers it part of your taxable income. There’s no separate “landlord tax” — your rental profits are added to your salary, business income, and any other earnings, then taxed at your marginal rate.

Getting this right isn’t optional. SARS has become increasingly effective at cross-referencing property ownership data with tax returns, and non-disclosure can lead to penalties, interest, and even criminal prosecution.

This guide breaks down exactly how rental income tax works, what you can claim, and how to keep your records audit-ready.

How SARS Treats Rental Income

Rental income falls under gross income as defined in the Income Tax Act. It’s not treated as a separate income stream — it’s added to everything else you earn in a tax year (1 March to 28/29 February).

What counts as rental income:

Monthly rent received from tenants
Key deposits or premiums paid by tenants for the right to lease
Lease premiums — any once-off payment a tenant makes to secure a lease
Parking fees, storage fees, or other charges related to the rental property
Improvements by tenants that you benefit from at the end of the lease (in some cases)

What doesn’t count:

Security deposits held in a separate interest-bearing account (these are refundable and not income until forfeited)
Reimbursements for expenses a tenant pays directly (e.g., the tenant pays their own electricity bill to the municipality)

Calculating Your Taxable Rental Profit

SARS taxes your net rental income — the amount left after subtracting allowable expenses from gross rental income.

Formula:

Net Rental Income = Gross Rental Income − Allowable Deductions

If your net rental income is positive, it’s added to your other income and taxed at your marginal rate. If it’s negative (a rental loss), you can offset it against your other income, reducing your overall tax liability.

Example

Suppose you earn R15,000 per month in rent (R180,000 per year) and your allowable expenses total R120,000:

Net rental income: R180,000 − R120,000 = R60,000
This R60,000 is added to your salary and other income
If your marginal rate is 31%, you’d owe approximately R18,600 in tax on the rental income

Allowable Deductions for Landlords

This is where most landlords leave money on the table. SARS allows you to deduct expenses that are incurred in the production of rental income. The key categories:

Bond Interest

You can deduct the interest portion of your bond repayments (not the capital portion). This is often the single largest deduction for landlords with a mortgage.

If only part of the property is rented out, you can only claim a proportional share of the interest.

Rates, Taxes, and Levies

Municipal rates and taxes
Body corporate or homeowners’ association levies
Refuse removal charges

Insurance

Building insurance premiums
Landlord liability insurance
Contents insurance (if you’re renting a furnished property)

Repairs and Maintenance

You can deduct the cost of repairs — work that restores the property to its original condition. Examples:

Fixing a burst geyser
Repainting after tenant damage
Repairing a broken window
Plumbing repairs

Important: You cannot deduct improvements (work that enhances the property beyond its original state). Adding a new room, installing a pool, or upgrading the kitchen are capital expenditure — they increase the property’s base cost for Capital Gains Tax purposes instead.

Agent and Management Fees

If you use a letting agent or property management platform, those fees are deductible. This includes:

Agent commission
Management fees
Advertising costs for finding tenants
Tenant screening fees

Other Deductible Expenses

Security costs (armed response, security gates)
Garden and pool maintenance (if included in the lease)
Pest control
Legal fees related to the rental (drafting leases, collecting arrears)
Accounting fees for rental income tax preparation
Travel costs for property inspections (at the SARS-prescribed rate per kilometre)

For a detailed breakdown of every claimable expense, see our complete guide to landlord tax deductions in South Africa.

Capital vs Revenue Expenditure — The Critical Distinction

This trips up more landlords than anything else. The rule:

Repairs (revenue expenditure) = deductible in the year incurred
Improvements (capital expenditure) = not deductible, but added to base cost for CGT

The test: Does the work restore the property to what it was, or does it make it better than before?

Scenario	Classification
Replacing a broken geyser with the same model	Repair (deductible)
Replacing a broken geyser with a solar system	Improvement (capital)
Repainting walls after normal wear	Repair (deductible)
Knocking down a wall to create open-plan living	Improvement (capital)
Fixing a leaking roof	Repair (deductible)
Adding a second storey	Improvement (capital)

If you’re unsure, consult a tax professional. SARS does audit this distinction closely.

Wear-and-Tear Allowances

If you rent out a furnished property, you can claim a wear-and-tear allowance on movable assets like furniture, appliances, and fittings. SARS publishes a list of acceptable write-off periods:

Furniture: 6 years
Appliances (stove, fridge, washing machine): 5–6 years
Carpets and curtains: 5 years
Electronic equipment: 3–5 years

You claim a straight-line deduction each year. For example, a R12,000 fridge with a 6-year write-off period = R2,000 per year deductible.

Record-Keeping Requirements

SARS requires you to keep rental income and expense records for five years from the date of your tax return submission. You’ll need:

Lease agreements
Bank statements showing rental receipts
Invoices and receipts for all expenses claimed
Bond statements (showing interest vs capital split)
Municipal accounts
Insurance policy documents and payment records
Records of any improvements (for future CGT calculations)

Keeping these records organised is critical. A shoebox of receipts won’t cut it if SARS requests supporting documents — which they can do at any time within that five-year window.

Indlu’s financial reporting dashboard automatically tracks your rental income and expenses, categorises them into the correct SARS-friendly buckets, and generates downloadable summaries at tax time. No spreadsheets, no shoeboxes.

How to Declare Rental Income on Your Tax Return

Rental income is declared on the ITR12 (individual tax return) under the Local Rental Income section. You’ll report:

Gross rental income received
Expenses incurred (broken down by category)
Net rental profit or loss

If you have multiple properties, each must be reported separately.

SARS’s auto-assessment system may not include your rental income — it’s your responsibility to edit your return and add it. Failing to declare is not an oversight SARS takes lightly.

Common Mistakes to Avoid

Not declaring rental income at all — SARS cross-references Deeds Office data with tax returns
Claiming improvements as repairs — this is the most audited area for landlords
Claiming 100% of expenses on a partly-rented property — you must apportion
Not keeping receipts — no receipt, no deduction
Forgetting to declare deposit interest — interest earned on the tenant’s deposit in your name is your income
Claiming bond capital repayments — only interest is deductible, not the principal

Frequently Asked Questions

Do I need to register as a provisional taxpayer?

If your rental income is not subject to PAYE and exceeds R30,000 per year, you likely need to register as a provisional taxpayer and make bi-annual payments to SARS.

Can I offset rental losses against my salary?

Yes. If your allowable deductions exceed your rental income, the resulting loss reduces your overall taxable income. However, SARS may scrutinise persistent losses, especially if the property is also used privately.

What if I rent to a family member at below-market rates?

SARS may deem the arrangement not to be a bona fide trade. If the rental isn’t at arm’s length, you may not be able to claim deductions against the income.

Is Airbnb income treated the same way?

Short-term rental income (Airbnb, Booking.com) is still rental income and must be declared. However, different expense apportionment rules may apply, and VAT registration may be required if your turnover exceeds R1 million.

Track your rental income and expenses automatically with Indlu’s financial dashboard — no spreadsheets, no stress. Start free today.