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RENTING
OUT TO WORLD CUP VISITORS? Consider the legalities...
By Annetjie Van Rooyen of
STBB Smith Tabata Buchanan Boys
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Ever since the
announcement in 2004 that South Africa would host
the Soccer World Cup in 2010, the tourism and
business industries have shown as much excitement
as the local soccer fans at the prospect.
Rent or Not?
Homeowners in host cities have seen a possibility
of making a little profit by renting out their
homes to visitors. Now that the World Cup is imminent,
many homeowners are still unsure whether or not
to plunge in and rent out. |
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If you
do, remember to:
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Evaluate your exposure to risk and
insure against damage to your property
and injuries a tenant may suffer in
your home. |
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| - |
An ordinary, existing
home insurance policy may not
be adequate due to the risk
profile (from an insurer’s
point of view) of soccer enthusiasts.
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Include the rental income in your
tax return - |
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SARS does allow
for certain deductions incurred
in the generation of the rental
income such as costs relating
to commission paid to a rental
agent, the interest on your
bond, electricity, water and
rates and levies (where applicable)
incurred over the rental period.
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Note that if you
use a rental agent, the latter
will declare rent collected
and paid over on his tax return.
So if you do not declare the
income, SARS will be alerted
to your gains via the agent’s
return. |
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Consider the legal requirements
of lease agreements. |
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The provisions
of the Rental Housing Act are
prescriptive and, amongst other
things, require the lessor to
invest the rent deposit in an
interest-bearing account, which
interest must be returned to
the tenant on termination of
the lease. |
| - |
If the tenant
so requests, a statement reflecting
the interest accrued must be
furnished to the tenant. |
| - |
The Act determines
that a lessor must, together
with the tenant, inspect the
property before commencement
of the lease to ascertain and
list existing defects or damage.
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Not less than
three days before termination
of the lease the landlord and
tenant must again arrange a
joint inspection of the premises
in order to ascertain if the
tenant caused any damage during
his occupation. |
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Failure to do so is deemed
to be an acknowledgement by
the lessor that the dwelling
is in a good and proper state
of repair, resulting in the
lessor having no further claim
for damages against the tenant!
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The lessor must
then be refunded the full deposit
plus interest by the lessor. |
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Conclusion
Do your homework before renting out
your property during the coming World
Cup tournament (and thereafter), advises
Annetjie Van Rooyen of STBB Smith
Tabata Buchanan Boys, and obtain legal
advice to ensure that your risks in
such a venture are managed. |
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| If you need
assistance in this regard,
you can contact Annetjie
Van Rooyen, Director
at STBB Smith Tabata Buchanan
Boyes attorney’s
on info@stbb.co.za |
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LEGALLY
SPEAKING…
Courtesy of Smith Tabata Buchanan
Boyes Attorneys (STBB)
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#1
CLOSE CORPORATIONS: HERE
TODAY, GONE TOMORROW?
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What happens when the
new Companies Act comes into
operation during the course
of 2010? Are CC`s a thing of
the past?
Yes and No! The
new Act makes various changes
to the Close Corporation Act
and in future both the Close
Corporations Act and the Companies
Act will regulate Close Corporations.
This means for example, that
Close Corporations will have
to prepare annual financial
statements in accordance with
the provisions of the Companies
Act.
Note also that:
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The new Companies Act
provides that as from
the date that it becomes
operative, no new Close
Corporations may be incorporated.
However, Close Corporations
that are in existence
at that time may continue
to exist until such time
as the legislature determines
otherwise. |
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Existing Close Corporations
may convert into a (new
Companies Act type) company
should the members decide
to do so and there are
specific provisions in
the new Act for this purpose.
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Should you stay or should you
go? Form a Close Corporation
now during this limited period?
Or enjoy the benefits of the
New Companies Act?
| Contact STBB
on info@stbb.co.za
for advice and assistance
to determine your best
way forward. |
#2
CAPITAL GAINS TAX LIABILITY
and TAX DIRECTIVE |
If you purchase a home
for more than R2 million
from a Non-Resident Seller,
you are obliged to withhold
5% of the purchase price
and pay it to SARS.
Similarly, if you purchase
property for more than
R2 million from a Foreign
Company or Trust you must
withhold respectively
7,5% and 10% of the purchase
price and pay it to SARS.
This `withholding tax`
is for payment of the
Sellers` CGT liability.
The Non-Resident Seller
can however apply to SARS
for a directive prior
to the registration of
transfer for an amended
rate of CGT, on good cause
shown. |
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| Contact STBB
on info@stbb.co.za
for advice and assistance
to determine your best
way forward. |
#3
HIGHLIGHTS OF THE 2010/2011
BUDGET SPEECH
Minister Pravin
Gordhan delivered the
2010/2011 budget speech
on Tuesday 16th March 2010. |
We bring you the highlights:
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There is no
change to the Transfer
Duty rates that
are payable in respect
of property transactions.
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If you are
under 65 years old, note
that:
- the income
tax threshold increased
from R54 200 to R57 000;
and
- interest and dividend
exemptions increased from
R21 000 to R22 300. |
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If you are older
than 65 years, note that:
- the income tax threshold
increased from R84 200
to R88 528; and
- the interest and dividend
exemptions have increased
from R30 000 to R32 000 |
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From 1 September 2010
onwards, new passenger
vehicles will
be charged a carbon emissions
tax. Therefore,
the more fuel efficient
your new car is, the less
tax you will pay. |
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Tax on fuel
will be increased to 25.5
cents a litre.
(This includes a 7.5 cents
a litre increase to contribute
to funding of a new petroleum
pipeline between Durban
and Gauteng and an increase
of 8 cents a litre towards
the Road Accident Fund
levy). |
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Sin taxes are
increased: Tobacco
and alcoholic products
will cost you more in
the new financial year.
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R89 billion will be
spent on social grants in 2010/2011.
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Provision has been made
for the phased extension
of the child support grant
up to a child`s 18th birthday.
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Old age pension and
disability amounts are
increased with R70 to
R1080 a month. |
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The child support grant
is increased with R10
to R250 a month. |
| Contact STBB
on info@stbb.co.za
for advice and assistance
to determine your best
way forward. |
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| If
you need assistance
on any of the above,
you can contact
Annetjie
Van Rooyen,
Director at STBB
Smith Tabata Buchanan
Boyes attorney’s
on info@stbb.co.za |
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