Tax and SARS knowledge base
How do I close a rental activity after selling the property?
How do I close a rental activity after selling the property?
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Direct answer
Do not simply delete a prepopulated rental property from your ITR12 after selling it. SARS's current ITR12 guide says that, from the 2023 year of assessment, a taxpayer with a prepopulated rental property or asset that is no longer used to earn rental income can mark the field indicating that it is no longer used for trading purposes, for example because it was sold. The guide also asks whether the property was still used for trading purposes for part of the year.
You still need to report the actual rental period in the year of sale and deal separately with the disposal and its possible capital-gains-tax consequences. Closing a rental activity is an ITR12 data step. It does not substitute for a supported rental schedule or a CGT calculation.
What this means in practice
Start with dates. Record the last date the property was available for rent, the end of any lease, occupation dates, agreement date, transfer date and the period to which each expense relates. Rental income received or accrued while the property was let needs to be identified, as do permitted expenses for that period. Do not include post-sale costs as rental deductions merely because they were paid after transfer.
If SARS prepopulates the property description and unique identifier from a prior return, retain that identifier and follow the current form wording rather than removing the entry. SARS says these fields are prepopulated and locked from the 2023 year of assessment where the information is available from its records. The current guide explains the closure prompt for a property no longer used to earn rental income.
The sale itself requires a separate disposal schedule. Retain the agreement, conveyancer statement, acquisition records, improvement documentation and costs relevant to the disposal. A capital gain or loss is not the same as rental profit or loss. Do not net the sale proceeds against rental income.
Step-by-step
- Make a property timeline.
Record rental availability, tenant dates, sale agreement, transfer and final payments. Keep the lease and conveyancing records.
- Complete the part-year rental schedule.
Include supported rent and expenditure for the actual rental period. Apportion mixed or annual costs on a supportable basis.
- Open the current ITR12 guide and live return.
Locate the prepopulated rental property and unique identifier. Do not change identifiers by guessing.
- Answer the closure and part-year questions accurately.
Use the field for a property no longer used for trading purposes where it reflects the facts, and answer the part-year rental-use question using the timeline.
- Prepare the disposal file separately.
Reconcile proceeds and cost records for the CGT section. Keep capital improvements apart from annual rental repairs.
- Review the assessment.
Compare the ITR12 and ITA34 to the schedules. Preserve screen prints or a PDF of the submitted return.
Documents and records to keep
- Lease, tenant ledger, deposit record and final rental statement.
- Sale agreement, transfer statement and proof of dates.
- ITR12 rental schedule, unique identifier and submitted return.
- Acquisition, improvement and disposal records for the CGT file.
- Expense invoices and a clear part-year apportionment calculation.
Important limits and exceptions
The SARS guide describes a reporting workflow and does not decide when a legal sale occurred or whether every cost is deductible. A property can cease earning rent before transfer, be occupied privately, have a deposit dispute or be sold as part of a larger business arrangement. These facts can change both the rental and CGT analysis.
Do not mark the property as no longer used for rental merely because there was a brief vacancy while you sought a new tenant. The answer should reflect the genuine end of the rental activity. If SARS has prepopulated incorrect property data, correct it using evidence rather than omitting the activity.
When to get tailored advice
Seek help for a mixed-use home, a material gain, an inherited property, a trust or company sale, a loss-making property, or a dispute about the sale date. TaxProof can organise the year-of-sale evidence file; a tax adviser can review the CGT position.