With the tax reprieve on the interest portion of your bond, plus rental income, experts are predicting an increase in buy-to-let investors.

The buyer’s market is prevailing and experts insist that it is still the best time to buy an investment unit. “We could remain in this market for another three to five years, so it’s a good time to think long term and secure a nice return for yourself by renting out your purchase,” says Mike Greeff, CEO of Greeff Properties, an affiliate of Christie’s International Real Estate. “Over the past six months, we’ve seen healthier movement in the R800 000 to R1.5million bracket, and many of these properties have been bought by investors with the specific intention of renting the units out,” adds Greeff.

Greeff attributes the increasing popularity of the buy-to-rent unit to the fact that while you’re paying off the interest portion of your bond, it’s all tax deductible. “It’s pretty much an enforced saving and the initial tax rebates can really get you on your feet and set you on track to building an income generating scenario long term,” he says.

According to Bond Originator, Kevin Harvey of Prime Property Finance, on a purchase price of R1 million, bond repayments over 20 years, based on a variable interest rate of Prime (9.00%) would be ± R8 997.25 per month, of which ± R7 500 is the initial interest, and as such, is tax deductible, cutting around R90 000 off your taxable annual income for the first few years. “More and more investors are seeing the benefits of rental income and the tax benefits on expenses incurred, such as rental agency fees and levies. Managed properly, this should lead to the likelihood of paying the bond off sooner and seeing a handsome profit on resale even after capital gains tax,” says Greeff.