Rental income is taxable, and nobody reports it for you
If you let out a flat, a cottage, a granny flat, a holiday home or a room in your house, the rent is taxable income and it goes into your annual return. There is no minimum below which it stops counting, and no exemption for renting to family.
It also changes how you deal with SARS this month. Your employer reports your salary and your bank reports your interest, but your tenant reports nothing. SARS says you will not be auto-assessed if you received income other than employment and investment income, and rental income is the example it gives. So a landlord has to file a return personally. For the year ended 28 February 2026, non-provisional taxpayers have until 23 October 2026, and provisional taxpayers until 22 January 2027. If you were auto-assessed anyway and the rent is missing, what to do before the October deadline walks through correcting it.
Rental profit is added to your other taxable income and taxed at your marginal rate. There is no separate, gentler rate for landlords.
Are you a provisional taxpayer?
PAYE is never deducted from rent, so a landlord is usually a provisional taxpayer. SARS's carve-out is narrow: you are not one if you do not carry on a business and your taxable income from interest, dividends and rental is not more than R30,000 for the year. Above that, expect two provisional payments a year, with an optional top-up. The exact test depends on everything else you earn, so confirm your position on eFiling or with a tax practitioner. Provisional tax explained covers the deadlines and penalties.
What you can deduct
You are taxed on the profit, not the rent. SARS lets you deduct expenses incurred in producing the rental income, for the period the property was let. Its own list is:
- Rates and taxes
- Bond interest
- Advertisements for a tenant
- Estate agent fees
- Homeowner's (building) insurance
- Garden services
- Repairs to the let area
- Security and property levies, including body corporate and homeowners association levies
Not on that list: household contents insurance and bond insurance, which SARS specifically excludes, and the cost of the property itself.
If you let only part of your home, divide the area let by the total area of the dwelling and apply that share to general running costs. A cost that relates only to the let area, such as repainting the room you rent out, needs no apportioning.
Used properly, these deductions often turn a healthy-looking rental yield into a small taxable profit or even a loss, particularly in the early years of a bond when the interest portion is largest.
The bond mistake almost everyone makes
This is the single most common error. Only the interest portion of a bond repayment is deductible. The capital portion is not.
The logic is straightforward once stated: the capital repayment is buying you an asset. It reduces what you owe and increases what you own. It is not a cost of producing rent. The interest is the cost of borrowing, and that is.
Your bank will give you an annual certificate splitting the two. Deducting the full instalment instead of the interest is an overstatement, and it is easy for SARS to spot if it asks for the bond statement.
Repairs are deductible. Improvements are not
This line catches people every year, because both feel like money spent on the property. SARS draws it this way: repairs and maintenance restore an asset to its original condition after damage or deterioration, while improvements create a better asset.
A repair is fixing a leaking roof, repainting, replacing a broken geyser with an equivalent one or servicing a gate motor. It is deductible in the year you spend it.
An improvement is adding a room, building a carport where there was none, installing a swimming pool or converting a garage into a flatlet. It is not deductible against rent, because it is capital expenditure.
Improvements are not lost, though. They are added to the property's base cost, which reduces your capital gain when you eventually sell. So the deduction is deferred rather than denied. Keep the invoice: you may be using it fifteen years from now.
When a rental loss stops being useful
If your deductible expenses exceed the rent, you have an assessed loss, and normally that loss reduces your other taxable income, including your salary. Section 20A of the Income Tax Act can switch that off. It is called ring-fencing: the loss can no longer be set off against your salary and can only be set off against future income from the same rental activity.
Ring-fencing is not a risk for every landlord. A loss is only caught if it passes two gates.
Gate one is your income. Section 20A only applies if your taxable income before the loss is high enough. For the year ended 28 February 2026, that means R1,817,001 or more, the start of the 45% bracket. For years starting on or after 1 March 2026, the trigger drops to the start of the 39% bracket, which is R695,801 for the 2027 tax year. SARS confirmed the change in its filing season 2026 updates. The first return affected is the one for the year ending 28 February 2027, filed in 2027, so a salaried landlord who has been safely below the old line should check where they now sit.
Gate two is the nature of the activity. Even in the bracket, the loss is only ring-fenced if either you made an assessed loss from the activity in at least three of the last five years, or letting residential property counts as a suspect trade. SARS's guide says residential letting is a suspect trade unless at least 80% of the accommodation is used by people who are not your relatives, and used by them for at least half of the year. Both parts have to be met. Relatives here means a spouse, parent, child, stepchild, brother, sister, grandchild or grandparent.
SARS's own worked example shows how this bites. Someone let two en-suite rooms in her main home, 120 square metres of a 420 square metre house, to non-relatives for 300 days. That is 28.57% of the house, short of 80%, so it was still a suspect trade even though the rooms were let most of the year. A holiday home that you or your family use, and that is only let in peak season for less than six months, is a suspect trade too. A whole property let to unrelated tenants for six months or more gets past the suspect trade test, but can still be caught by the three-in-five rule.
There is an escape clause. Ring-fencing does not apply if the activity is a business with a reasonable prospect of making taxable income (not counting capital gains) within a reasonable period. SARS looks at the facts as a whole, such as scale, whether the letting is planned and regular, and whether it is run for profit. The escape closes once you have made a loss in six of the last ten years, after which ring-fencing is automatic.
A ring-fenced loss is not destroyed. It is carried forward and used against future profit from the same property, which for a long-term hold can be a considerable wait.
Records to keep, and for how long
Every deduction above needs a document behind it. The practical list is your lease, the annual bond interest certificate, municipal and levy statements, insurance schedules, agent statements, and invoices for every repair. SARS expects records to be kept for five years from the date you submit the return.
Keep the improvement invoices separately and indefinitely, because those are base cost documents for a capital gains calculation that might be decades away.
Working out whether it actually pays
Before the tax question there is a simpler one that many landlords have never done on paper: does this property make money?
Add up a year of rent, then subtract every deductible cost above. Then subtract the capital portion of the bond as well, because although it is not tax deductible it is still cash leaving your account. Finally, subtract an allowance for vacancy, because no property is let every single month forever, and an allowance for maintenance that has not happened yet but will.
What is left is what the property actually returns in cash. Many rentals come out slightly negative in the early years and are held for the capital growth and the bond being paid down by someone else. That is a legitimate strategy as long as it is a decision rather than a surprise.
Quick answers
Do I pay tax if I only rent out a room in my own house?
Yes, the rent is taxable. You may deduct a share of the general running costs, worked out by dividing the area let by the total area of the dwelling. If the room makes a loss and your income is high enough for section 20A, expect it to be ring-fenced, because one room will not be 80% of the house.
Can I deduct my whole bond repayment?
No. Only the interest. The capital portion reduces your debt and builds your asset, so it is not an expense of earning the rent.
Does rental income make me a provisional taxpayer?
Usually, yes. The exception is if you carry on no business and your taxable income from interest, dividends and rental is not more than R30,000 for the year.
Will SARS include my rent in an auto-assessment?
No. SARS does not auto-assess people who earned rental income, so you need to file a return yourself, by 23 October 2026 if you are not a provisional taxpayer.
Keeping the property's numbers separate
What makes rental tax painful in October is not the rules, it is reconstructing a year of mixed transactions from one bank account. Rates, levies, a plumber, an agent's commission and your own groceries all leave the same account, and untangling them months later is slow.
Budget Hub is a budgeting tool, not a landlord ledger, so keep the lease, bond certificate and repair invoices in a folder for the return. What it does help with is the income side of the picture: it records rental income as its own line, separate from salary and investments, so you can see how much of your monthly income depends on the property. It is a living figure you update when the rent changes, not a month-by-month record. If you are weighing a property up as an investment rather than a home, what rent should cost looks at it from the tenant's side, and tax deductions you are probably missing covers the personal deductions that sit alongside it.