I have a client who recently finished the construction of 8 apartments, which he now earns rental income form. Where on his ITR12 do I claim the 5% building allowance (section 13(sex))? Must it be included when calculating the rental income (ie gross rent
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
The 13sex allowance, or the deduction in respect of certain residential units, can’t be used to reduce the gross rental amount. It is also not to be reflected as the “wear and tear allowance (s11(e)”.
You are correct that the form doesn’t make specific provision for this allowance. Whilst it may be similar to the section 13ter allowance, in respect of costs of residential buildings for employees, we don’t believe that it should be captured there either.
As the rental must be declared in the “Local Rental Income from the Letting of Fixed Property(ies) (Excluding amounts received / accrued as a beneficiary of a trust(s), or deemed to have accrued in terms of s7) (continue)” part of the ITR12, we suggest that the amount is declared in the depreciation container.