Can I claim interest on second property?

Cape Town - A Fin24 user who has bought a second property to rent with the aid of an access bond and a loan from a different bank wants to know if he can claim interest on the full amount.

He writes:"I recently bought a second property which I am renting out. I have borrowed the 60% deposit for the rental unit from my access bond of my first (residential) property.

"The remaining 40% of the bond for the rental property is with another bank. Can I claim the interest amount on the full purchase price (since I borrowed it from my access bond) or just the interest portion on the 40% bond?"

Piet Nel of the SA Institute of Tax Professionals responds:

From the information provided we take it that the full purchase price was funded (albeit by two different institutions).  It is also evident that the intention was to derive rental income. 

It therefore meets the requirements of section 24J(2) and can be deducted against the rental income. 

As the original (or the access bond) was not taken out with an intention to trade you will have to prove, if SARS so request, that the draw-down now as utilised to acquire the second property. 

* Have a question? Send it to us and we will find an expert to answer.

ALSO SEE previous tax questions from users:

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