I’m moving to Ireland. I have an EU passport and will register for tax in Ireland. I have a property in SA that I will rent out until some time next year, then sell it and move the money overseas in batches of R1 million.
I have two more properties which I intend to keep and rent out. Do I need to financially emigrate? Do I need to let Sars know about my plans? Could I just simply pay tax in South Africa on my rental properties?
Thank you for your question.
No, you do not need to financially emigrate to keep and rent out properties in South Africa.
However, there are a few things you need to keep in mind when you own assets in SA but live abroad:
- You are still liable for South African tax on any income you earn from your South African assets. This includes rental income, interest income, and capital gains.
- You may also be liable for South African tax on your worldwide income, depending on your tax residence status. South Africa has a residence-based tax system, meaning residents are taxed on their worldwide income. Non-residents are only taxed on their income from South African sources.
Here are some specific tax implications to keep in mind:
- Rental income: If you rent out properties in South Africa, you will be liable for South African income tax on the rental income. You will need to declare your rental income to the South African Revenue Service (Sars) and pay tax on it at the applicable rate.
- Interest income: If you earn interest on deposits held in South African banks, you will be liable for South African income tax on the interest income. The bank will withhold the tax on your behalf and pay it to Sars.
- Capital gains: If you sell an asset in South Africa, you may be liable for capital gains tax. The capital gains tax rate depends on how long you have owned the asset and the amount of the capital gain.
Tips for managing your South African assets from overseas:
- Keep good records of all your income and expenses related to your South African assets;
- Use a reputable financial advisor or investment manager to help you manage your South African assets; and
- Stay up to date on changes to South African tax laws and regulations.
Here is a more detailed overview of the steps involved:
Notify Sars that you are leaving the country, and it will place your non-residency status on record.
Appoint a tax representative in South Africa
It is advisable to appoint a tax representative in SA who can handle your tax affairs while you live abroad. The representative will stay up to date with any changes to SA tax laws, which will benefit your specific case.
Use a reputable rental agent to manage your properties
When choosing a rental agent, it is important to select one who is reputable and has experience managing properties for non-resident landlords. You should also make sure the agent is licensed and insured.
South African capital gains tax
If you sell your properties in South Africa in the future, you will be subject to South African capital gains tax. The capital gains tax rate depends on how long you have owned the properties and the amount of capital gain.
If you have any further questions about emigrating from South Africa or keeping and renting out properties in South Africa, it is advisable to consult a qualified financial advisor and/or tax consultant.