Rental Income and Expenses

Any rent payments you receive when you rent out your property are subject to income tax and must be declared in your income tax return.

Rental Income

Rental income refers to the full amount of rent and related payments you receive when you rent out your property. This includes rent of the premises, maintenance, furniture and fittings.

Rental income is subject to income tax. This means that any profit or net amount left once you have added together your rental income and deducted any allowable expenses is taxable.

Your property is still subject to property tax, which can be calculated by multiplying the Annual Value (AV) of the property to the applicable Property Tax Rate.

Generally, forfeiture of the rental deposit is considered as part of your gross rent and is taxable.

However, depending on the reason for the forfeiture of the rental deposit (e.g. rental deposit forfeited due to damages to property by tenant), IRAS may consider excluding it as part of the gross rent. When filing your tax return, please provide IRAS with reasons for the forfeiture of the rental deposit.

Some property owners may choose to rent out a portion of their property (e.g. a spare room while still dwelling in their home). This is called "subletting". The rental income from subletting is taxable.

Property owners are required to apportion the allowable expenses incurred based on the number of rooms rented out.

Date of Taxable Rental Income

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

Your tenant rented your property from Oct to Dec 2016. However, he only paid the rent for this period in Jan 2017.

You need to declare the rent for Oct to Dec 2016 for the Year of Assessment (YA) 2017 as the rent was due to you in 2016.

Amount of Taxable Rental Income

The rental income is taxed 100% on the sole owner of the property. It does not matter whether the sole owner or a third party receives the rent.

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

The rental loss is also apportioned to joint owners, based on their legal share in the property.

Rental Expenses

Expenses incurred solely for producing the rental income and during the period of tenancy may be claimed as tax deduction. The table below lists allowable and non-allowable rental expenses*:

Type of Expense

Allowable Expenses

Non Allowable Expenses

Housing loans

Interest paid on the loan or mortgage taken to purchase the property that is rented out. (See Note 1)

Repayments of the principal loan or mortgage amount (monthly instalments)


Penalty imposed by banks for late repayment of loans

Property tax

Incurred during the rental period (e.g. property tax paid for year 2015, on property rented out in 2015).

Incurred outside the rental period.


Penalty imposed for late payment or non-payment of property tax.


Balance brought forward from previous year's property tax.

Fire insurance

Premiums paid on fire insurance.

Capital sum assured on property.

Repairs

Repairs done during the rental period to restore the property to its original state.

Initial repairs before the property was rented out.


Repairs done which result in improvement/additions and alterations.


Repairs incurred outside rental period.

Maintenance

Cost of maintaining the property (e.g. painting, pest control, monthly maintenance charges to management corporations).

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

Agent's commission, advertising, legal expenses and stamp duties for getting subsequent tenants.


Agent's commission, advertising, legal expenses and stamp duties for getting the first tenant of an additional property is deductible against the rental income of that property (See Example 3).

Agent's commission, advertising, legal expenses and stamp duties for getting the first tenant (See Note 2).

Costs of supervision or management fees

Costs in engaging a third party (e.g. property agent / company) to carry out activities such as ensuring rentals are paid promptly, maintenance and upkeep of the properties and attending to tenants queries and complaints.


Where the management fees is paid to a related party (e.g. relatives or own company), owners need to justify that the amount paid is at market rate and commensurate with the services rendered.

 

Furniture and fittings

Replacements of furnishings (e.g. furniture, fixtures, electrical appliances) to its original state.

 

Hiring of furniture.

Depreciation of furnishings (e.g. furniture, fixtures, electrical appliances).


New improvements/additions made to furnishings (e.g. furniture, fixtures, electrical appliances).

Internet charges/expenses

Paid on behalf of tenant (as long as it is not reimbursed by tenant subsequently.

Paid on behalf of tenant and reimbursed by tenant subsequently.

Utility expenses

Paid on behalf of tenant (as long as not reimbursed by tenant subsequently).

Paid on behalf of tenant and reimbursed by tenant subsequently.

Expenses incurred on properties that are not generating rental income

N.A.

The relevant expenses incurred on such properties e.g. rent, utilities, maintenance paid for own accommodation/a vacant property, etc. cannot be claimed against the rental income generated from other properties as the expenses are capital and private in nature. (See Note 3).

*You are required to keep the supporting documents for at least 5 years for verification purposes.

Notes

  • Loan obtained (by mortgaging Property A) to purchase Property B.
    The loan interest is deductible, provided rental income is generated from Property B.
  • 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.
  • 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.
  • For interest incurred on refinanced loans, please refer to the administrative concession for interest incurred by taxpayers on loans to re-finance earlier loans or borrowings.

As a concession, agent's commission, advertising, legal expenses and stamp duties for getting the first tenant of an additional property is deductible against the rental income of that property. (See Example 3)

You bought Property X in 2015 for your own stay. In 2016, you decided to rent out Property X and rented a house (Property Y) near your office for the convenience of travelling to and from work. 

The rent paid on Property Y is considered as a private expense and is not a deductible expense against the rent received from Property X.

Calendar Year

2015

2016

Year of Assessment

2016

2017

Properties Owned

First (Property A)
illustration1 illustration3

First (Property A)
illustration1 illustration6

Description of Use of Property

Taxpayer bought Property A in May 2015.

 

Property A was under renovation for three months before it was rented out.

 

In Sep 2015, Property A was rented out for a period of two years (from Sep 2015 to Aug 2017) to its first tenant, John.

 

You incurred commission which you paid to an agent to secure the tenant.

In Jun 2016, the tenant terminated the lease agreement.

 

Property A was vacant for three months before a new tenant was secured in Oct 2016.

 

You have taken reasonable efforts to look for the tenant during the vacant period but the property was not rented out due to unforeseen circumstances, e.g. poor market sentiment or oversupply of housing in the property market

 

Commission was paid to an agent to secure the new tenant (subsequent tenant).
During the vacant period, minor repairs were carried out on Property A

Allowable Expenses

  1. Interest on housing loan paid for the acquisition of Property A during the period of tenancy (Sep 2015 to Dec 2015);
  2. Property Tax paid for Property A during the period of tenancy (Sep 2015 to Dec 2015)
  1. Interest on housing loan paid for the acquisition of Property A (including the vacant period) during the period of tenancy (Jan 2016 to Dec 2016);
  2. Property Tax paid for Property A (including the vacant period) during the period of tenancy (Jan 2016 to Dec 2016);
  3. Costs of securing subsequent tenant on Property A (e.g. Agent's commission, advertising, legal expenses and stamp duties paid);
  4. Cost of repairs incurred on Property A during the vacant period.

Disallowable Expenses

  1. Cost of renovation incurred on Property A prior to commencement of tenancy
  2. Costs of securing first tenant (e.g. agent's commission, advertising, legal expenses and stamp duties paid) prior to the commencement of tenancy

NIL

Calendar Year

2016

Year of Assessment

2017

Number of Property Owned

First (Property A)
illustration1illustration8

Second (Property B)
illustration1rental

Description of the Use of Property

Rented out since May 2015

In Feb 2016, taxpayer bought Property B and made some minor repairs before it was rented out.

 

Taxpayer rented out Property B ( subsequent property ) from May 2016 to Apr 2017 to its first tenant, Joan.

 

Commission was paid to agent to secure the tenant.

Allowable Expenses

  1. Interest on housing loan paid during the period of tenancy for the acquisition of:
    • Property A (Jan 2016 to Dec 2016)
    • Property B (May 2016 to Dec 2016)
  2. Property Tax paid during the period of tenancy
    • Property A (Jan 2016 to Dec 2016)
    • Property B (May 2016 to Dec 2016)
  3. Costs of securing first tenant on Property B (e.g. agent's commission, advertising, legal expenses and stamp duties paid).  As both properties are rented out concurrently, the cost of securing the first tenant on Property B will be allowed as a deduction.

Disallowable Expenses

Cost of repairs incurred on Property B prior to the commencement of tenancy

Simplified Claim for Rental Expenses

Property owners who lease their residential properties are able to enjoy the convenience of pre-filled rental expenses from YA 2016.

To simplify tax-filing and reduce the burden of record-keeping, an amount of deemed rental expenses calculated based on 15% of the gross rent will be pre-filled on the online tax form. In addition to the 15% deemed rental expenses, property owners can still claim mortgage interest on the loan taken to purchase the tenanted property. You only need to keep the supporting documents relating to the mortgage interest for at least 5 years for verification purposes; you are not required to keep records of the other rental expenses incurred.

Alternatively, taxpayers can opt to claim the amount of actual rental expenses incurred. Please retain all supporting documents such as tenancy agreements, bank mortgage statements, invoices and receipts for at least 5 years for verification purposes.

If you have more than one tenanted residential property and opt to claim actual rental expenses on any one tenanted residential property, you will need to apply this treatment consistently to all your tenanted residential properties. This means you cannot claim 15% deemed rental expenses on one tenanted residential property and claim actual rental expenses on another tenanted residential property.

A residential property does not include any property that has been given approval for any non-residential use such as that of a child care centre and workers' dormitory.

The deemed expenses option is not applicable under the following circumstances:
(a) You did not incur any deductible expense (apart from mortgage interest) in respect of the rental income derived; or
(b) You derived the rental income through a partnership in Singapore; or
(c) You derived the rental income from a property held under a trust.

You can only claim the actual rental expenses incurred. You are required to keep the supporting documents for at least 5 years for verification purposes. 

You have rented out your residential property at a gross rent of $5,000 per month from 1 Jan 2016 to 31 Dec 2016. Besides the interest of $12,000 paid on the loan taken to purchase the property, you have incurred a total amount of $7,500 on other deductible expenses, namely property tax, fire insurance and maintenance. You may claim the deemed rental expenses as follows:

Gross Rent for the year 2016 

: $5,000 x 12 = $60,000 

Mortgage interest

: $12,000

Other expenses

: $60,000 x 15% = $9,000

Net Rent
= $60,000 - $12,000 - $9,000
= $39,000   

You are living in a four-room flat with three bedrooms. You sublet one of the rooms from 1 Jan to 31 Dec 2016. Your tenant pays you $600 per month as rent. The total amount of deductible expenses incurred for the whole flat is $3,000.
Your net rent is calculated as follows:

Rental Period from 1 Jan to 31 Dec 2016Computing Net Rent based on Actual Expenses IncurredComputing Net Rent based on Simplified Claim for Rental Expenses
Gross Rent for 2016$600 x 12 = $7,200$600 x 12 = $7,200
Deductible Expenses(1 bedroom / 3 bedrooms) x $3,000 = $1,000$7,200 x 15% = $1,080
Net Rent (Gross Rent - Proportion of allowable expenses allowed)= $6,200 ($7,200 - $1,000)= $6,120 ($7,200 - $1,080)

Explanation: You must apportion the allowable expenses incurred based only on the number of rooms rented out.  Alternatively, you may opt to claim the rental expenses based on 15% of the gross rental income.

Find out more about Simplification of Claim of Rental Expenses for Individuals (247KB). 

Calculating Rental Income

You may use our Rental Calculator (254KB) to compute your rental income if you opt to claim actual expenses incurred.

Reporting Rental Income

You have to declare the gross rent of your property in the previous year and details of deductible expenses of each property under 'Other Income: Rent from property' in your tax return.
The required details include the following:

  1. total annual rent collected; and
  2. total deductible expenses
  3. share of the rent (for jointly-owned property)

Reporting Late or Not Reporting Rental Income

You may incur penalties for submission of incorrect returns (e.g. failing to report any rental income) to IRAS.
However, IRAS may waive the penalty if voluntary disclosure is made within the 'grace period' of one year from the statutory filing date.

Find out more about How to Report a Mistake to Qualify for Zero Penalty or Lower Penalty.

Rental Losses

Losses from renting out your property cannot be carried forward and used to offset against any other income (e.g. employment income) that you may have in the same year or in the future.

However, as an administrative concession, you may use the rental loss of one property to offset against the taxable rental income of another property in the same year provided all the rented out properties have been rented out at market rates.

Property

Rental Gain/Loss in 2016

Rental gains from property A

$30,000

Less: Rental loss from property B

$10,000

Taxable net rent

$20,000 ($30,000 - $10,000)

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

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