I appreciate you saying if you're not paying tax you're not making money and making it clear that you want to pay the LEAST amount possible but there's always going to be tax to be paid if making money. As an accountant I'm so bored of hearing people wanting to pay zero tax but want to make millions in profit because it pushes people to fraud🤦🏽♂️
That's true it pushes people to fraud. But some of us are so tired of the gov claiming beyond 10% if the God of all creation only asks 10. Grudge purchases lead to consumer revolt. Tax isn't even a purchase it's a dead loss to our society as it's being squandered so lavishly. So yes a citizen pushes to pay least possible tax as it begrudges us so much to see it being wasted like water running from a dam with a broken wall and nobody cares to repair it they just push for móre.
I break out in hives listening to this. People get sucked deeper and deeper into The System, bound up in so much red tape that they die from financial as well as existential suffocation. 1. Setting up a trust : upfront and ongoing costs from lawyers and accountants as well as bank costs, plus the time spent submitting to SARS, not to mention requiring endless monitoring by yourself. 2. Setting up a company/legal entity to own the real estate : see point 1. above. 3. Money and years of your life constantly flowing outwards as the system (government departments, SARS, accountants/auditors, attorneys, financial consultants, insurance companies, builders, banks (fees and interest) etc. extract their share of the little profit you make. 4. Refusing to become entangled in all the above by living modestly and thereby retaining time to spend with your loved ones and out in nature - priceless. #isfalsesecurityworthtradingyourfreedomfor?
An individual can claim the interest on a bond as a tax-deductible expense if the property is generating rental income. Additionally, individuals can claim deductions for repairs, maintenance, levies, property rates, and taxes, provided these expenses are directly related to the rental property. While I am not advocating for investment properties to be held in private capacity instead of through a business or trust, it’s important to note that many of the associated tax benefits can still be claimed as an individual.
No you can claim interest on all of your loans, so if you have 2 rental properties and 1 property you stay in you can combine all of interest as deductible
@@rubenkotze74 Nonsense. If you have a house with a flat on a bond, and you have rental income from the flat, you are only allowed to deduct bond interest up to the rental income of the flat. You cannot simply deduct the full bond interest because there is some small income. It does not work like that. Your scenario of 2 rental props and 1 personal and deducting all the interest is not legal. Best hope to not get audited.
🤣💪🏻I often take clients out for meetings at simmiiliar places. Luckily, I only declare things when it's actually applicable to my properties. Thanks for watching 👊🏻
Tried - unsuccessfully - to edit my other post. Just to add : there are other benefites to having ones properties in an external legal entity, estate planning & management.
I appreciate you taking the time to provide this information. I'm a Zimbabwean living in Namibia and moving to South Africa for studies next year. I'm just a student, so I dont have the capital to invest, but I have the time to learn all I can in preparation for when I have the capital. Thank you for the great content.
You can reduce your tax with stocks, for example if you day trade US common stocks, (meaning you hold stock for 5 minutes or less), the pc you using, Wi-Fi, software cost for charting, live data from the exchange, news data, your house as a office. To name the few: it’s always safe to say, I don’t know if that can be done.
Thanks for the useful video. If I purchase a property for rental income, is the estate agent's commission (charge when selling the property) and the attorney's fees tax deductible?
Yes it has to involve property to benefit from all the tax beneifts. But the same principles can Apply to other businesses aswell. There is just a fine line
Hey! Thank you for posting! If possible, i had sent you an email a week ago about acquiring the spreadsheet to determine if a house is a good investment 🎉
Thanks for reaching out. Appologies for the delayed response. I have been hectic busy the last few weeks. Ill jump into my email this week again and forward you the spreadsheets 🙌🏻
You can either transfer it to the Cc like you would normally transfer a property ( this involves transfer and registration cost ) or you can consult with accountant and consider a asset for sales swop
And the end of the day, you would like to have some money in your pocket so be able to spend it. How do you get the money out of your "company" as an income to buy food etc? Because if you do that as a salary it is still the same as having a normal job and paying tax, right?
Why would one refinance instead of taking a new loan? Does it not ultimately come down to the same thing as you need the bank to do a credit assessment either way?
What if I have two companies, one that owns the property, and another one which provides property management services to the first. Technically that way I could drive the first company’s net profit down to zero while paying myself. Is that crossing the line into dodgy territory?
@ ok but transfer pricing only says my inter-company prices must adhere to the arm’s length principle. If they do, I can just have multiple transactions until profits are down to 0 again
Thanks for the video. If I have equity on a property, with an existing bond that is being repaid, how do I refinance if there is still a bond to be repaid? Surely a second bond doesn’t make sense? How does it work?
Jaco, I hope you see this comment. Please assist. The fair value adjustment on the investment property is not fully tax deductible? The inclusion rate for capital gains tax is 80%. If you revalue with R100 000. 80% of it is a temporary difference for deferred tax, so yes, it will increase your assets. With R80 000x27% On the other side, the 20% is a permanent difference which will be adjusted for in income tax note at R20 000x27% At the end of the day, will the bank look at your actual SOCI or the tax computation? The profit on those will differ with+- R100 000
Ek het 'n paar eiendomme in my eie naam en verhuur hulle. Maar om hulle nou in 'n besigheid in te sit, sal transfer fees ens kos. So dis nie die moeite werd nie, is dit? Ek weet ook nie hoe om so entiteit te skep nie.
Mens kan iemand soos Prosperity Enterprises gebruik om te help met die entities. Hulle kan mens ook raad gee oor die skuif van die eiendomme. Daar is maar koste betrokke om dit te sluif so dit hang af of jy nog eiendom wil koop of nie. As jy nie wil nie en hou by wat jy het kan jy dit sekerlik hou soos dit is. Daar is wel baie voordele om dit eerder te skuif, al nadeel is die koste en moeite
Middag toevallig op jou vraag afgekom.Weet nie presies waar jy gebaseer is nie maar ek kan jou help of net beginsels deur gesels met n kundige Groete Reinard Ek is nie v die Prosperity groep nie
@@louisreynhardthow do you offset the initial costs of setting up a trust and starting with buying a home in bond? Isn’t trust tax 45 % compared to around 27 % as a pty ltd/sole entity?
@@thamingobeni7075you just learn man, you always can create an entity tat purchases the property from you. This will cancel your bond in your name and place it in the entities name, potentially you can even borrow for higher and be sitting with cash. Although you do need to weigh up transfer fees/bond fees etc. But generally may work out better in the long run
I have a run down property in Stellenbosch that has business rights, right next to big estate and in a huge growth zone. Currently an old house on it running as business but, Development granted for: 900sqm 70% coverage 3 storeys That's a potential GLA of +/- 1500sqm if developed at nothing under R150/sqm in Stellenbosch. Ideal spot for restaurants/gym/offices/residential/laundry/drive-through/hair-salon/doctors rooms etc. Etc. Come Louis reach out and let's develop this boet you can even film the process.
Thanks for sharing, sounds like a good opportunity. I would eventually attempt developing but at this stage I prefer buying existing properties. You can pop me an email at louisreynhardt@gmail.com with some more details if you want to. Thanks for watching 👊🏻
i Have a fixed deposit investment of witch the interest is paid to me monthly but want to open another fixed deposit investment at another bank, will the interest of the second investment be classified as a second income and attract higher tax and capital gains tax or is it better to have all your eggs in one basket?
It will still form part of your taxable income either way. If it exceeds the tax threshold of the interest you can receive, that will increase your income tax. A option to consider is to invest that money into a TFSA which will be tax free
Just consider the cost of setting up the structure. 2 more financial statements and tax returns. Also there is a higher Capital Gains Tax inclusion rate when selling the property. Unless you are at the maximum marginal rate of tax in the long term you are probably going to be worse off using a structure and the accountant will be smiling all the way to the bank. My view is not to use a structure but rather do it in your own hands. The exception is if you are in an occupation which could expose you to liability for injury or damages. The property portfolio would be protected from claims against you when in a structure. The deductions mentioned in this video are available whether claimed by a company or in your own hands. The video sounds like an advetorial to drum up business. Just my view.
Thanks for watching and for sharing your view. The cost of these structures are really not that expensive and the cost to setup and manage these entities will be worth it in the long run compared to owning 4 or maybe 5 properties in your own name. Just remember, a smart accountant is absolutely worth the money. Theres many other ways to reduces taxes that you wont be able to do in your personal name. Using the expenses as deductions is just one small part of reducing taxes.
Chartered Accountant with a Master's degree in Taxation here. A few errors in the advice provided by this gentleman: 1. The type of tax-deductible expenses is not dependent on whether a property is held in a company, trust, or personal capacity. Therefore, it's unnecessary to incur additional administrative costs by running your business through a company or trust, especially when getting started on a property portfolio. Conpaniea and Trusts are becoming expensive to run from an admin perspective. 2. Refinancing a property solely for tax benefits may not be the most effective strategy, as the costs may outweigh the potential tax savings. Why pay R1 to save 27c. 3. Revaluing a property in financial statements has no bearing on bank finance, as banks conduct their own property valuations for lending purposes. 4. Expenses incurred while sourcing a property, such as travel and meals as mentioned by this gentleman are not tax-deductible as they are considered capital in nature. Be careful out there folks.
Thank you for taking the time to share your views in the comments. You make valid points but your perspective might be different. 1. Running a property portfolio in you personal name is just not smart. Not only for tax reasons, but for growth, protection and estate planning. Running a portfolio in your own name is not a business its a side hustle which normally doesn't end well. 2. Refinancing has many benefits besides taxes. ( again, taxes should not be the main decision maker ) growth and leverage is the best way to grow your wealth. This is what you use refinancing for. You can read up on the Brrrr strategy to understand it a bit more. 3. You are correct, but if you understand how these banks value properties and the people they use to value properties you can quickly realise that within boundaries its possible to manipulate these values( it has to be realistic and true offcourse ) with that said, it does not simply give you a ticket to endless financing. 4. Although I agree, there are still many deductions that can be made. Thanks for sharing your experience. I however think its important to note that a video or a channel cannot be judged based on one video and in general we are simply trying to share free information.
For nr. 4, then just say the purpose is to meet a potential client (tennant) to discuss documentation. These should be (non-capital) business expenses, right?
It's all well and fine but when the money touches your hands that income is included in gross income so you get taxed personally. Now you've been taxed in your company and in your personal capacity. You can also deduct expenses when you have investment property in your personal capacity. It's called a sole proprietorship. Bankers aren't total idiots either.
Lol don't say stuff without being sure. You can avoid the double tax by paying yourself a salary until the company shows zero profit then it will only show as income in you personal capacity and you will have reaped the benefits of tax deductible expenses before it reaches your own hands
@rubenkotze74 then the company doesn't show a profit which, according to them, is bad because then the bankers won't approve financing so the business cannot grow with credit. So it's a double edged sword. But I'm sure you'll educate me further. Thanks in advance.
We regularly advise our clients on property ownership structures. In particular, we recommend using a close corporation (CC) rather than a private company, especially when considering succession planning and ensuring a smooth transfer of ownership to the next of kin.
Ok, so NO tax is not really the truth. Owning a property will automatically attract municipal rates and taxes. You cannot escape that. Yes, you can pass a load of expenses against income to reduce the tax exposure, but one will never arrive at zero tax. Therefore, the title to this video is deceptive.
How I pay no taxes in South Africa is to NOT own any property in SA anymore 😂. Not a good idea to own part of a ship that the ANC criminal cartel has been steering onto the rocks for 30 years. US property investment I made years ago grew 600% in R value in 18 years, 😂while the SA one decreased 10% in real terms and actually 50% when you factor inflation in over comparable time period…
@ You can own a property in the USA as a South African or own a company that own the property. It is currently very expensive to buy property there due to the high US prices and R18 to a $, but get your savings into gold/ krugerrands meanwhile for now.
Please don’t tell the beginners to start out with a Trust, cause it’s costly and not necessary when starting out. I had to deregister my Trust. Just register a business Pty(Ltd) when you starting out.
@louisreynhardt I'm referring to your leverage strategy, not the purchasing of the homes. When a small portion of tenants can't make the payments to service your debt, it can wipe you out. But I guess you already know that and are fine with the elevated risk...
@benehiko appologies, misunderstood your comment. The risk for default will always be there. I take calculated risk and use cash flow and healthy reserve funds to mitigate this risk.
@@louisreynhardt I hope so for your part. One of my uncles in his old age lost everything due to how leveraged he was, and he was also very experienced having bought properties with this super leveraged method for most of his life. He died poor and his wife had to rely on family to take her in.
Same people will complain about corrupt government officials taxi drivers crime healthcare etc pay your fokken taxes. Gonna see the response to this comment 😂😂😂😂
I appreciate you saying if you're not paying tax you're not making money and making it clear that you want to pay the LEAST amount possible but there's always going to be tax to be paid if making money. As an accountant I'm so bored of hearing people wanting to pay zero tax but want to make millions in profit because it pushes people to fraud🤦🏽♂️
Thanks for your comment and for pointing that out. I totally agree. First make money, then focus on reducing taxes.
That's what he said? What did I miss?
This week my accounted said SARS doesn’t allow refinancing benefit anymore…crazy
That's true it pushes people to fraud. But some of us are so tired of the gov claiming beyond 10% if the God of all creation only asks 10. Grudge purchases lead to consumer revolt. Tax isn't even a purchase it's a dead loss to our society as it's being squandered so lavishly. So yes a citizen pushes to pay least possible tax as it begrudges us so much to see it being wasted like water running from a dam with a broken wall and nobody cares to repair it they just push for móre.
@@MorneBooysenrefinancing of the bond or access bond?
Definitely saving this video for the future
Is there a coursewe can take to learn more about reducing taxes? Pro's and con's of different entities.
I break out in hives listening to this.
People get sucked deeper and deeper into The System, bound up in so much red tape that they die from financial as well as existential suffocation.
1. Setting up a trust : upfront and ongoing costs from lawyers and accountants as well as bank costs, plus the time spent submitting to SARS, not to mention requiring endless monitoring by yourself.
2. Setting up a company/legal entity to own the real estate : see point 1. above.
3. Money and years of your life constantly flowing outwards as the system (government departments, SARS, accountants/auditors, attorneys, financial consultants, insurance companies, builders, banks (fees and interest) etc. extract their share of the little profit you make.
4. Refusing to become entangled in all the above by living modestly and thereby retaining time to spend with your loved ones and out in nature - priceless. #isfalsesecurityworthtradingyourfreedomfor?
On point, perfect
Totally agree
Very insightful content and I especially love that you are responding to comments. For these reasons, you have gained a subscriber. Thank you!
Thanks for the support and the positive feedback. Welcome to the channel 💪🏻 💪🏻
An individual can claim the interest on a bond as a tax-deductible expense if the property is generating rental income. Additionally, individuals can claim deductions for repairs, maintenance, levies, property rates, and taxes, provided these expenses are directly related to the rental property. While I am not advocating for investment properties to be held in private capacity instead of through a business or trust, it’s important to note that many of the associated tax benefits can still be claimed as an individual.
No you can claim interest on all of your loans, so if you have 2 rental properties and 1 property you stay in you can combine all of interest as deductible
@@rubenkotze74 Nonsense. If you have a house with a flat on a bond, and you have rental income from the flat, you are only allowed to deduct bond interest up to the rental income of the flat. You cannot simply deduct the full bond interest because there is some small income. It does not work like that. Your scenario of 2 rental props and 1 personal and deducting all the interest is not legal. Best hope to not get audited.
@abrie288
Lol you are speaking complete nonsense go and talk to a professional and you will see you are incorrect.
@@rubenkotze74 I have discussed it with plenty of professionals, watch out for that audit :) ciao
Enjoying the videos. Thank you for the opportunity to learn more about the property game.
Pleasure my friend. Well done for taking the time to educate yourself. 👏🏻
You guys are on point, I however doubt SARS will accept receipts from Spur and Cubana. 😅
🤣💪🏻I often take clients out for meetings at simmiiliar places. Luckily, I only declare things when it's actually applicable to my properties. Thanks for watching 👊🏻
The more obsessed we are on not paying tax, the more the government obsesses on how they are going to tax us to death😂😂
Exactly 🤣
Pretty obvious, how can they fund their lifestyles otherwise?
Thank you for helping normal south africans.
So many things I have tried to help my dad with, but he refuses to hire an accountant.
🙌🏻🙌🏻Glad it can help. Spread the word where you can. Unfortunately, you cant force people to change or improve. It has to come from within.
Talking about Equity, can it be calculated as part of affordable towards next property purchase??
Not exactly, but if you have access to it, you can effectively use it as a deposit.
Thank you for this, love it
Only a pleasure. Enjoyed making this video.
Tried - unsuccessfully - to edit my other post.
Just to add : there are other benefites to having ones properties in an external legal entity, estate planning & management.
Absolutely, theres many benefits, and it's worth the effort and money to set up these entities 👏🏻
here before it gets taken down
What if the rental property is in my personal name and is financed
I appreciate you taking the time to provide this information. I'm a Zimbabwean living in Namibia and moving to South Africa for studies next year. I'm just a student, so I dont have the capital to invest, but I have the time to learn all I can in preparation for when I have the capital. Thank you for the great content.
Thanks so much for watching. Im glad that this information is beneficial. Keep on learning and invest in yourself. All the best
Very informative video Louis, keep up the hard work!
Thanks, appreciate yhe comment 👍
You can reduce your tax with stocks, for example if you day trade US common stocks, (meaning you hold stock for 5 minutes or less), the pc you using, Wi-Fi, software cost for charting, live data from the exchange, news data, your house as a office. To name the few: it’s always safe to say, I don’t know if that can be done.
Quite informative! Thanks 👍🏾
Thanks for watching 👊🏻 💪🏻
Thanks for the useful video. If I purchase a property for rental income, is the estate agent's commission (charge when selling the property) and the attorney's fees tax deductible?
Does it have to be as a rental business or can this be done as a married couple?
Yes it has to involve property to benefit from all the tax beneifts. But the same principles can Apply to other businesses aswell. There is just a fine line
Hey! Thank you for posting! If possible, i had sent you an email a week ago about acquiring the spreadsheet to determine if a house is a good investment 🎉
Thanks for reaching out. Appologies for the delayed response. I have been hectic busy the last few weeks. Ill jump into my email this week again and forward you the spreadsheets 🙌🏻
@ Completely understandable, no stress at all! Thanks for getting back to me. Have a great week! ✨
If I already have property in my personal name how do I transfer that to an enterprise?
Hi Malcom ,you would need to register a business under CIPC and move the property under your business profile .
You can either transfer it to the Cc like you would normally transfer a property ( this involves transfer and registration cost ) or you can consult with accountant and consider a asset for sales swop
TL,DW: Borrow money so you don't show a profit.
And buy cash flowing assets and rinse and repeat 💪🏻💪🏻
Thanks, great video
Thanks for watching 👊🏻 💪🏻
how do you get the book in the background its not online
You can follow this link of Jaco's website : prosperityenterprises.co.za/prosperity-through-property-book/
Very informative 👏
Thanks for watching 👊🏻
And the end of the day, you would like to have some money in your pocket so be able to spend it. How do you get the money out of your "company" as an income to buy food etc? Because if you do that as a salary it is still the same as having a normal job and paying tax, right?
Finally a new video. Great stuff Guys
Thanks for showing up and watching. Ive been hectic busy so had to skip a few weeks
Baie dankie Loui en Yacu
Why would one refinance instead of taking a new loan? Does it not ultimately come down to the same thing as you need the bank to do a credit assessment either way?
3% of people in South African pay 76% of all income tax.
Scary statistics 😑
the other 97% watched this video!
If you dont have a company but doing everything on personal basis, can you still claim for rates and taxes interest on bond etc?
Yes you can still benefit from those tax deductions
What do the LLC and trust's book keeping and financial records set one back every month....why can't I collect cash and just hide it ?
Can a trust founder also be the trustee? Is there any disadvantage to this structure?
Yes absolutely 💯 🙌🏻 i would consider reaching out to a professional to understand the ins and outs.
Yes, he or she can be a trustee.
You will have make sure of the guidelines though.
We don't want to pay tax as cyril and co. are stashing our contributions in their couches !
💯
Stop justifying your tax fraud by complaining about government. We all pay. The poorest of the poor pay.
@@altGoolam Oh dear, low capacity, smooth brained logic.
Who then will own the company that holds the properties?
A trust and you will become a beneficiary.
What if I have two companies, one that owns the property, and another one which provides property management services to the first. Technically that way I could drive the first company’s net profit down to zero while paying myself. Is that crossing the line into dodgy territory?
not really, but SARS recently (late 2024) was addressing transfer pricing, ie costs between connected companies!
@ ok but transfer pricing only says my inter-company prices must adhere to the arm’s length principle. If they do, I can just have multiple transactions until profits are down to 0 again
I believe this is called Vertical Integration, and is a fantastic business growth step if performed at the correct time
Do I need a license to start a rental company
Im not sure tbh
Thanks for the video. If I have equity on a property, with an existing bond that is being repaid, how do I refinance if there is still a bond to be repaid? Surely a second bond doesn’t make sense? How does it work?
You can check out this video I made about refinancing.
ua-cam.com/video/kyCRtQQaiTA/v-deo.htmlsi=FPwAH08vFGygtwJL
Jaco, I hope you see this comment. Please assist.
The fair value adjustment on the investment property is not fully tax deductible?
The inclusion rate for capital gains tax is 80%.
If you revalue with R100 000.
80% of it is a temporary difference for deferred tax, so yes, it will increase your assets. With R80 000x27%
On the other side, the 20% is a permanent difference which will be adjusted for in income tax note at R20 000x27%
At the end of the day, will the bank look at your actual SOCI or the tax computation? The profit on those will differ with+- R100 000
@louisreynhardt
Ek het 'n paar eiendomme in my eie naam en verhuur hulle. Maar om hulle nou in 'n besigheid in te sit, sal transfer fees ens kos. So dis nie die moeite werd nie, is dit? Ek weet ook nie hoe om so entiteit te skep nie.
Mens kan iemand soos Prosperity Enterprises gebruik om te help met die entities. Hulle kan mens ook raad gee oor die skuif van die eiendomme. Daar is maar koste betrokke om dit te sluif so dit hang af of jy nog eiendom wil koop of nie. As jy nie wil nie en hou by wat jy het kan jy dit sekerlik hou soos dit is. Daar is wel baie voordele om dit eerder te skuif, al nadeel is die koste en moeite
Middag toevallig op jou vraag afgekom.Weet nie presies waar jy gebaseer is nie maar ek kan jou help of net beginsels deur gesels met n kundige Groete Reinard Ek is nie v die Prosperity groep nie
@@louisreynhardthow do you offset the initial costs of setting up a trust and starting with buying a home in bond? Isn’t trust tax 45 % compared to around 27 % as a pty ltd/sole entity?
So when you guys talk about the bank interest does one need to take a bond in the entitys name or your personal name? Great show otherwise
This will still be in the entities name so that it can be used as a tax deduction.
I've messed up then because the bond is in my name 😢
@@thamingobeni7075you just learn man, you always can create an entity tat purchases the property from you. This will cancel your bond in your name and place it in the entities name, potentially you can even borrow for higher and be sitting with cash. Although you do need to weigh up transfer fees/bond fees etc. But generally may work out better in the long run
@@thamingobeni7075 is it a rental unit or your personal home?
If you don't break even yet from your rental property, do you still have to pay tax?
@thusomaila3229 you wont pay tax if you dont make money on your bottom line. But you still need to submit your taxes to be above board with SARS.
Perhaps ask Jaco why he hasn't paid levies on his property in a year a half...while subletting rooms to 3 people
I have a run down property in Stellenbosch that has business rights, right next to big estate and in a huge growth zone. Currently an old house on it running as business but,
Development granted for:
900sqm
70% coverage
3 storeys
That's a potential GLA of +/- 1500sqm if developed at nothing under R150/sqm in Stellenbosch. Ideal spot for restaurants/gym/offices/residential/laundry/drive-through/hair-salon/doctors rooms etc. Etc.
Come Louis reach out and let's develop this boet you can even film the process.
Lol
Sell the deal
Well done
Good platform to approach😊
Thanks for sharing, sounds like a good opportunity. I would eventually attempt developing but at this stage I prefer buying existing properties. You can pop me an email at louisreynhardt@gmail.com with some more details if you want to. Thanks for watching 👊🏻
Have you tried contacting Murray Clark at Neighbourgood in CT? He's a developer and might he interested.
i Have a fixed deposit investment of witch the interest is paid to me monthly but want to open another fixed deposit investment at another bank, will the interest of the second investment be classified as a second income and attract higher tax and capital gains tax or is it better to have all your eggs in one basket?
It will still form part of your taxable income either way. If it exceeds the tax threshold of the interest you can receive, that will increase your income tax. A option to consider is to invest that money into a TFSA which will be tax free
@@louisreynhardt Thank you.
Just consider the cost of setting up the structure. 2 more financial statements and tax returns. Also there is a higher Capital Gains Tax inclusion rate when selling the property. Unless you are at the maximum marginal rate of tax in the long term you are probably going to be worse off using a structure and the accountant will be smiling all the way to the bank. My view is not to use a structure but rather do it in your own hands. The exception is if you are in an occupation which could expose you to liability for injury or damages. The property portfolio would be protected from claims against you when in a structure. The deductions mentioned in this video are available whether claimed by a company or in your own hands. The video sounds like an advetorial to drum up business. Just my view.
Thanks for watching and for sharing your view. The cost of these structures are really not that expensive and the cost to setup and manage these entities will be worth it in the long run compared to owning 4 or maybe 5 properties in your own name. Just remember, a smart accountant is absolutely worth the money. Theres many other ways to reduces taxes that you wont be able to do in your personal name. Using the expenses as deductions is just one small part of reducing taxes.
Chartered Accountant with a Master's degree in Taxation here. A few errors in the advice provided by this gentleman:
1. The type of tax-deductible expenses is not dependent on whether a property is held in a company, trust, or personal capacity. Therefore, it's unnecessary to incur additional administrative costs by running your business through a company or trust, especially when getting started on a property portfolio. Conpaniea and Trusts are becoming expensive to run from an admin perspective.
2. Refinancing a property solely for tax benefits may not be the most effective strategy, as the costs may outweigh the potential tax savings. Why pay R1 to save 27c.
3. Revaluing a property in financial statements has no bearing on bank finance, as banks conduct their own property valuations for lending purposes.
4. Expenses incurred while sourcing a property, such as travel and meals as mentioned by this gentleman are not tax-deductible as they are considered capital in nature.
Be careful out there folks.
Thank you for taking the time to share your views in the comments. You make valid points but your perspective might be different.
1. Running a property portfolio in you personal name is just not smart. Not only for tax reasons, but for growth, protection and estate planning. Running a portfolio in your own name is not a business its a side hustle which normally doesn't end well.
2. Refinancing has many benefits besides taxes. ( again, taxes should not be the main decision maker ) growth and leverage is the best way to grow your wealth. This is what you use refinancing for. You can read up on the Brrrr strategy to understand it a bit more.
3. You are correct, but if you understand how these banks value properties and the people they use to value properties you can quickly realise that within boundaries its possible to manipulate these values( it has to be realistic and true offcourse ) with that said, it does not simply give you a ticket to endless financing.
4. Although I agree, there are still many deductions that can be made.
Thanks for sharing your experience. I however think its important to note that a video or a channel cannot be judged based on one video and in general we are simply trying to share free information.
For nr. 4, then just say the purpose is to meet a potential client (tennant) to discuss documentation. These should be (non-capital) business expenses, right?
It's all well and fine but when the money touches your hands that income is included in gross income so you get taxed personally. Now you've been taxed in your company and in your personal capacity.
You can also deduct expenses when you have investment property in your personal capacity. It's called a sole proprietorship.
Bankers aren't total idiots either.
Lol don't say stuff without being sure.
You can avoid the double tax by paying yourself a salary until the company shows zero profit then it will only show as income in you personal capacity and you will have reaped the benefits of tax deductible expenses before it reaches your own hands
@rubenkotze74 then the company doesn't show a profit which, according to them, is bad because then the bankers won't approve financing so the business cannot grow with credit. So it's a double edged sword. But I'm sure you'll educate me further. Thanks in advance.
No such thing as no tax
We regularly advise our clients on property ownership structures. In particular, we recommend using a close corporation (CC) rather than a private company, especially when considering succession planning and ensuring a smooth transfer of ownership to the next of kin.
You can't set up CC's in South Africa for the past 20 years.
Yip, tried and only option is pty Ltd not for profit ones
Does a trust work in the same way
You can no longer set them up but there are companies that sell previously registered ones
@@s.mtambo6712 you’ll need to purchase one, as they were discontinued for this specific reason.
Ok, so NO tax is not really the truth. Owning a property will automatically attract municipal rates and taxes. You cannot escape that. Yes, you can pass a load of expenses against income to reduce the tax exposure, but one will never arrive at zero tax. Therefore, the title to this video is deceptive.
That constant crocodile smile. Dont know if i can trust that😂
How I pay no taxes in South Africa is to NOT own any property in SA anymore 😂. Not a good idea to own part of a ship that the ANC criminal cartel has been steering onto the rocks for 30 years. US property investment I made years ago grew 600% in R value in 18 years, 😂while the SA one decreased 10% in real terms and actually 50% when you factor inflation in over comparable time period…
@ You can own a property in the USA as a South African or own a company that own the property. It is currently very expensive to buy property there due to the high US prices and R18 to a $, but get your savings into gold/ krugerrands meanwhile for now.
Please don’t tell the beginners to start out with a Trust, cause it’s costly and not necessary when starting out. I had to deregister my Trust. Just register a business Pty(Ltd) when you starting out.
Just remember, theres a cheap way and theres a right way. ✅️
Well said! It's also much harder to deregister and close any legal entities than it is to open them.
Took me 6 months to deregister my Trust. Start with a business entity and form a Trust once you have at least more than 6 properties.
Sounds like you're growing a nice bubble just waiting to be popped when there is an economic downturn.
@benehiko When there is a downturn, it's simply the best time to buy.
@louisreynhardt I'm referring to your leverage strategy, not the purchasing of the homes. When a small portion of tenants can't make the payments to service your debt, it can wipe you out. But I guess you already know that and are fine with the elevated risk...
@benehiko appologies, misunderstood your comment. The risk for default will always be there. I take calculated risk and use cash flow and healthy reserve funds to mitigate this risk.
@@louisreynhardt I hope so for your part. One of my uncles in his old age lost everything due to how leveraged he was, and he was also very experienced having bought properties with this super leveraged method for most of his life. He died poor and his wife had to rely on family to take her in.
@benehiko sorry to heat about that. But technically the older you get the less leverage you should use.
Kan like to make English try speak for tax no pay ek se. Praat Afrikaans!
Same people will complain about corrupt government officials taxi drivers crime healthcare etc pay your fokken taxes.
Gonna see the response to this comment 😂😂😂😂
Lekker Louis, laat weet my as jy Trellidor’s, shutters of blinds kort in jou eiendomme. Glo ons kan iets uitwerk jy weet😊
@@jacovanwyk46 hi Jaco,
Stuur vir my 'n epos na Louisreynhardt@gmail.com. soek tans blinds vir so paar plekke.
Groete