Rent Income

Rent from PropertyRent

    Rental income received from the letting of property in Singapore is subject to income tax, while your property is subject to property tax. Your rental income includes rent of the premises, maintenance, furniture and fittings. After deductions for allowable expenses (such as property tax), the net amount is taxable.

    Calculate your rental income with Rental Income Calculator

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When is rental income taxable

    Rental income is taxable when it is due and payable to the property owner, and not the date of actual receipt.

    Example:
    Your tenant rented your property from Oct to Dec 2011. He paid the rent for this period in Jan 2012, the following year. You need to declare the rent for Oct to Dec 2011 in the Year of Assessment (YA) 2012 as the rent was due to you in 2011.

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For jointly-owned property

    The rental income is taxed on all the joint owners based on their share in the property. It does not matter which party receives the rent or whether the owners paid for the property. This also applies to rental loss. The rental loss is apportioned to joint owners based on their share in the property.

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Rental Expenses

    For an expense to be deductible from rental income derived in Singapore, the expense must be incurred solely for the purpose of producing the rental income AND during the period of tenancy.

    Types of Expense
    Housing Loans claimable

    Interest paid on the loan or mortgage taken to purchase the property which is rented out.

    non claimable
  • Repayments of the principal loan or mortgage amount (monthly instalments).
  • Penalty imposed by banks for late repayment of loans.
  • Example:

    1. Loan obtained (by mortgaging Property A) to purchase Property B.
      The loan interest is deductible provided rental income is generated from Property B.
    2. Loan obtained (by mortgaging Property A) to be used for other purposes e.g. to purchase another property for residential purpose or for business, etc.
      The loan interest is not deductible against rental income of Property A as the loan is not incurred to purchase the said property.
    3. Overdraft obtained for financing the purchase of Property A and also for personal use.
      Only that portion of the loan interest applicable to the amount of loan to finance the purchase of Property A is deductible against its rental income.
    4. For interest incurred on refinanced loans, please refer to e-Tax guide “Administrative concession on interest incurred by taxpayers on loans to re-finance earlier loans. or borrowings”.
    Property Tax claimable Incurred during the rental period (e.g. property tax paid for year 2010, on property rented out in year 2010).
    non claimable
  • Incurred outside the rental period.
  • Penalty imposed for late payment or non-payment of property tax.
  • Fire Insurance claimable Premiums paid on fire insurance.
    non claimable Capital sum assured on property.
    Repairs claimable Repairs done to restore the property to its original state.
    non claimable
  • Initial repairs.
  • Repairs done which results in improvement/additions and alterations.
  • Repairs incurred outside rental period.
  • Maintenance claimable Cost of maintaining the property (e.g. painting, pest control, monthly maintenance charges to management corporations).
    non claimable Cost of renovation, additions, alterations to the property (e.g. extension of car porch, construction of drains, cementing of walls and floors, installation of window grilles).
    Costs of Securing Tenant claimable
  • Agent’s commission, advertising, legal expenses and stamp duties for getting subsequent tenants.
  • Cost of renewing a lease or changing a tenant.
  • Agent’s commission, advertising, legal expenses and stamp duties for getting the first tenant of a subsequent property is deductible against the rental income of that property.
  • non claimable Agent’s commission, advertising, legal expenses and stamp duties for getting the first tenant.
    Costs of Supervision & Rent Collection claimable This expense is not deductible as it is incurred after the income is earned. However, as a concession, if you rent out a number of properties and incur costs in engaging a third party (e.g. property agent / company) to supervise the properties and to collect rent on your behalf, a sum not exceeding 5% of the gross rent or the actual amount spent, whichever is less, may be considered. Each case will be considered on its own merits.
    Furniture & Fittings claimable
  • Replacements of furnishings (e.g. furniture, fixtures, electrical appliances) to its original state.
  • Hiring of furniture.
  • non claimable
  • Depreciation of furnishings (e.g furniture, fixtures, electrical appliances).
  • New/Improvements/Additions made to furnishings (e.g. furniture, fixtures, electrical appliances).
  • Internet Charges & Expenses claimable Paid on behalf of tenant (as long as not reimbursed by tenant subsequently).
    non claimable Paid on behalf of tenant, but reimbursed by tenant subsequently.
    Utility Expenses claimable Paid on behalf of tenant (as long as not reimbursed by tenant subsequently).
    non claimable Paid on behalf of tenant, but reimbursed by tenant subsequently.

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Subletting of Property

    Some landlords may choose to rent out a portion of their property (for e.g. 1 room) to their tenants. Landlords are required to apportion the claimable incurred based on the number of rooms rented out.

    Example: You are living in a 4 room flat with 3 bedrooms. You sublet 1 of the rooms to your tenant from 1 Jan to 31 Dec 2011. Your tenant pays you rent of $600 per month. In addition, the total claimable incurred is $3,000.

    Your net rent is calculated as follows:
    Gross Rent for the year 2011 : $600 x 12 = $7,200
    Total claimable incurred : $3,000
    Total number of rooms in your property : 3 rooms
    Total number of rooms rented out : 1 room
    Proportion of claimable allowed : $3,000/3 x 1 = $1,000

    Net Rent = Gross Rent – Proportion of claimable allowed
    = $7,200 – $1,000
    = $6,200

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Non-Reporting of Rental Income

    IRAS can detect non-reporting of rental information. Landlords with rental income should report the income in their tax returns. Those who have not done so by 18 April of each year, the filing deadline, may email IRAS. There are penalties for submission of incorrect returns. However, IRAS may waive the penalty if voluntary disclosure is made within the ‘grace period’ of 1 year from the statutory filing date.

    Find out more about how to report a mistake to qualify for zero penalty or lower penalty.

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Rental Deficits

    If your gross rent from property is less than your deductible expenses, you cannot offset such rental deficits against any other income you may have in any year. Similarly, you cannot offset your loss in one year against your rent in any years. You can only offset the amount of rental loss of one property against the taxable rental income of another property. You cannot carry forward the previous year’s rental deficits against the current year’s rental gain.

    Example:
    Rental Gain/(Loss) in the year 2009
    property A = $30,000
    property B = ($10,000)

    Rental gains from Property A less Rental loss from Property B
    $30,000 – $10,000
    Taxable net rent = $20,000

    You will be taxed on the net gain of $20,000 from these two properties.

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Transfer of rental deficits between spouses

    A married couple can transfer their rental deficits between each other. You can only offset the amount of rental loss transferred against your spouse’s taxable rental income.

    Example:
    Husband’s taxable rental income in 2011 = $1,000
    Wife’s rental loss in 2011 = $1,500
    The wife can transfer $1,000 of her rental loss to be offset against husband’s rental gain.

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How to transfer

    An election has to be made by both spouses in writing on a year to year basis, giving their names, identification numbers and signatures. The election can be made at any time, including the time when you submit your income tax form. However, the election cannot be made after 30 days from the time you or spouse receive the Notice of Assessment, whichever is the later. Once made, the election is irrevocable. IRAS will re-compute you and your spouse’s assessment to take into account the respective transfers. Any subsequent revision to either party’s tax assessment will result in a corresponding revision to the other party’s tax assessment.

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For more information, please visit IRAS

*Please note that information provided is as it is basis, whilst every effort has been made to provide up-to-date information. The author is not responsible for inaccuracies or whatsoever as a result from using this information.


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