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Usufruct rent received from trust
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2012/12/03 at 12:37:57 PM GMT
E. Bosman
Posts: 2
Usufruct rent received from trust

Good day,

 I would like to know what expenses can be deducted in a client's personal name when receiving usufruct rent. The property's bare dominium is in a trust and the rent is paid into the trust's bank account. Levies, commission paid, bank charges, accounting fees and interest paid (bond) is paid from trust's bank account. 

 The bond was registered to buy the bare dominium from client.

 The rent is re-allocated to client's loan account in trust and I want to allocate expenses to the loan as well to be deducted in client's personal income tax return. 

 Can anyone please give me some guidance regarding what can be deducted from usufruct rent by law.

 Thank you in advance.



2012/12/04 at 06:57:14 PM GMT
M. White
Posts: 56

Good Evening Emile

Here’s my offering .

Principles.

The usufructuary has the right to receive income from the asset held under the usufruct.

(Note that he does not have the right to dispose of the asset itself).

Any non capital expenditure actually incurred by the usufructuary in order to produce that income ought to be deductible from that income.

Application.

The usufructuary to include rental income as part of his gross income.

Expenditure provided it meets the criteria set out above ought to be deductible against rental income.

Notes.

Lease agreement (written) should reflect Usufructuary as lessor.

Recommend that a separate bank account be opened in usufructuary’s name for rental receipts and expenditure incurred.

Interest incurred in respect of bare dominium holder‘s bond would in my view not be deductible from usufructuary’s rental income.

Recommendation:

It is advisable to approach a tax consultant whom you should apprise of all the facts in order to give you a proper opinion.

 



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