Tags: Tax
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income tax

Attention Non-Resident Landlords!

A growing number of emigrating South Africans are exploring the prospect of retaining their rental properties in South Africa, notwithstanding their relocation plans. The question that arises in this situation is invariably that of financial emigration. In essence, financial emigration is not a prerequisite for continuing to rent property, but as a property owner, several income tax aspects must be considered to ensure a smooth transition and successful management of your assets that will remain in South Africa.

Financial Emigration and Property Ownership

Financial emigration is a process that changes your status with the South African Reserve Bank (SARB) from resident to non-resident. Financial emigration does, however, not change property ownership. This means that individuals that own property in South Africa can continue doing so after emigration, and existing income tax regulations will continue in respect of their rental profits of rental income, interest income, and capital gains.

Rental Revenue: South African income tax applies to those who earn rental income from properties in South Africa. This income must be declared to SARS and taxed at the applicable rate.
Interest Earnings: Any interest accrued from deposits in South African banks is subject to South African income tax. In this instance, the bank will handle the tax withholding on your behalf, ensuring it is paid to SARS.
Capital Gains: Selling an asset in South Africa may make you liable for capital gains tax. This tax rate depends on the duration of your ownership of the asset and the magnitude of the capital gain.

Depending on your tax residence status, you could also be obligated to pay South African tax on your global income. This is because South Africa operates a residence-based tax system where residents are taxed on their worldwide income, irrespective of where the income was earned. Non-residents are only taxed on their income from a South African source.

How to Effectively Manage South African Assets Abroad

01

Designate a Tax Representative

It’s recommended to assign a tax representative in South Africa who can manage your tax obligations while you reside overseas. We have the expertise to successfully manage your requirements and stay informed about changes to South African tax laws to ensure compliance.

02

Maintain Comprehensive Records

Keep meticulous documentation of all income and expenses associated with your assets in South Africa. This will help you track your financial performance and simplify reporting your earnings for tax purposes.

03

Engage a Trustworthy Rental Agent

It’s crucial to select a rental agent who is reputable and experienced in managing properties for non-resident landlords. Ensure that the agent possesses the necessary industry licenses and insurance coverage.

Selling or Renting?

While you do not need to financially emigrate if you plan to rent out properties in South Africa, understanding the financial implications of your decision is essential. Having a trusted local income tax professional becomes critical in this context! Our experts understand the intricacies of local tax laws and regulations.
Reach out to the MMS Group team for more information.

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