SA rental income

[BarryHeyns]

Hi

 

I have a question for the tax guru's on here, we have a property in South Africa, I receive X amount of rental revenue from the property per month.

 

I am not considering selling the property at the moment, but would like to hear your comments on what the implications are with regards to the different income streams

 

* I know I have to declare the rental revenue on this property to ATO, do you perhaps know whether South Africa and Australia have any double tax agreements regarding rental revenue?

* As a Australian resident / citizen, if I sold the property in the future, would I be taxed in Australia or South Africa or both? Especially regarding capital gains taxes?

 

I would like to make an informed decision before we move, the property has a lot of investment potential and the return is great at the moment, so selling will be my last resort.

 

Regards

Barry

Edited July 3, 2017 by BarryHeyns

[SandraDee]

I have a property in South Africa which I rent out. I have only done one tax return under guidance of an accountant so here is my limited understanding.

 

There is a double tax treaty with South Africa.

 

I pay my tax on my South African property in South Africa. I then declare my world wide income in Australia. I am given a tax credit for the amount of tax I have paid in South Africa and then pay the difference if any here in Australia.  

 

With regards to Capital gains tax I have been told you pay it in both countries so its a double whammy and one reason why everyone suggests not keeping your property in South Africa.  

 

Hope that helps!

[BarryHeyns]

Thanks Sandra

 

That was my concern, I will see if I can get more detail about this. But if we really think we will never return to SA it would probably be best to sell everything.

 

Regards

Barry

[Alchemist]

Never mind the current issues by the constitutional court ruling, basically you can't evict people anymore if they have no place to go. Personally, i would sell and take the money to Oz. you can always buy again if you need to go back.....the property market in SA is quite literally the opposite of Oz. Rather leverage your capital in Oz and buy property there.

[BarryHeyns]

1 minute ago, Alchemist said:

Never mind the current issues by the constitutional court ruling, basically you can't evict people anymore if they have no place to go. Personally, i would sell and take the money to Oz. you can always buy again if you need to go back.....the property market in SA is quite literally the opposite of Oz. Rather leverage your capital in Oz and buy property there.

 

Yeah, this is the only remaining question we keep on asking ourselves.

 

But it would be great to leave nothing here to worry about, the admin of managing it from Aus will also become a problem

 

 

[Alchemist]

Its a hard thing. We just bought our dream home and the thought of selling to buy a little box (if we can lol) in Oz kills me BUT i see it like this. I would rather buy an investment place in oz to rent out (offset against tax) and rent a bigger home to live until we can consolidate when a little older in to a medium place. 

[JulesR]

5 hours ago, BarryHeyns said:

But if we really think we will never return to SA it would probably be best to sell everything.

YOU.DON'T.WANT.TO.RETURN!!!!!

 

Seriously!!

[MichKen]

Hi @BarryHeyns, we are making a similar decision on our home.  Reason being that we can make a really decent rental income from our house, probably enough to put a decent rental roof over our heads in Adelaide, in a decent area.  For us this is worth far more as an income generator than as cash.  Understanding that there are tax implications, we believe the property will be able to self-fund and will be able to give us an ongoing income for the rest of our lives, so for us in our circumstances are that we feel it's better for us this way.  This is of course not without it's risks, we all know that there is a great deal being said about land and that this is a hot political and economic issue; therefore this is a definite risk we have considered.  The risk of the economy going completely to Zim status is also there.  But in any investment there is always risk; and we feel the actual and real return is there where as these risks may never happen, so we don't want to make this decision from a point of fear.  There's a lot of opinions on the matter but you need to do what's right in your own circumstances, I believe. I don't believe that a home that is near to paid off or paid off should be handled the same way as a bond only a few years in - for this you want to cover the debt and make some return.  But once it's yours, it can make you annuity income well into your old age and that's what our decision is based on.

 

Thats our 5c worth....

[Duke1989]

Good to see that I'm not alone with regards to this decision... I have a small unit that is currently occupied by renters, and managed by Remax. When I spoke to my agent earlier this week, she advised and warned against selling the property, as the house market is at an all time low. I would like to go over, knowing that my assets is the least of my problems.

 

That said, I still have a few months before heading down under, so decided to wait. Let's hope the "vote of no confidence" will be in our favour!

[JulesR]

@MichKen - are you getting an agent to manage the rental of your house?

[MichKen]

@Duke1989The truth is it's not a sellers market at the moment, it is definitely a rental market though and if you see what small places go for in rental it's really crazy!  I'm so glad we don't have to pay rent right now, but of course it will be good to be on the receiving end 

 

@JulesR we haven't fully made up our minds how we will manage this, but it's likely we will use an agent rather than trying to manage it ourselves from across the ocean.  We have a trusted friend whom we will give a proxy to for any legal issues on the property and we have a couple of attorneys in the family, so.... legally we will be able to deal with any issues that arise through these two parties.

[189inprocess]

This was an interesting discussion. We dont have a bond on our house, bought a old run down house and have done lots of renovations. We love our house, and what we have done to it but we almost feel like we should sell as if we rent we will have a much higher income than expenses on the house (tax whammy in RSA) and then when we sell we "should" make a good profit due to the renovations .. Am i correct then in saying we would be subject to capital gains tax in RSA and Aus? 

[SimpleSimon]

Thanks for this post. We went to Jhb and CT for a holiday at the beginning of. The year. I was tempted to buy a property as the price for a mansion there are 10% of what we paid for an average house in Sydney. We could virtually afford the deposit out of our pocket money. I now see why the properties are so cheap.