Individuals Filing Tax (for Locals) : Rent from Property

Source

Rent from property

Rental income 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. The net amount after deductions for allowable expenses (such as property tax) is taxable.

Generally, forfeiture of rental deposit is also considered as your Gross Rent. However, depending on the reason for the forfeiture of the rental deposit, IRAS may consider to exclude it as part of the Gross Rent. Therefore, please furnish the reason for the forfeiture of the rental deposit when filing your tax return.

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 1: When do you need to declare the rental income that was due from your tenant in the year 2013 but was only paid to you in the year 2014?

Your tenant rented your property from Oct to Dec 2013. He paid the rent for this period in Jan 2014, the following year.

You need to declare the rent for Oct to Dec 2013 in the Year of Assessment (YA) 2014 as the rent was due to you in 2013.

For solely owned property

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

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.

Rental expenses

For an expense to be deductible from rental income derived in Singapore, the expense must be incurred:

1. Solely for the purpose of producing the rental income; AND
2. During the period of tenancy.

ype of Expense	Claimable Expenses	Non Claimable Expenses
Housing loans	Interest paid on the loan or mortgage taken to purchase the property which is rented out. (See Note 1)	1. Repayments of the principal loan or mortgage amount (monthly instalments) 2. Penalty imposed by banks for late repayment of loans
Property Tax	Incurred during the rental period (e.g. property tax paid for year 2013, on property rented out in year 2013)	1. Incurred outside the rental period 2. Penalty imposed for late payment or non-payment of property tax 3. Brought forward balance from previous year’s property tax
Fire Insurance	Premiums paid on fire insurance	Capital sum assured on property
Repairs	Repairs done to restore the property to its original state	1. Initial repairs 2. Repairs done which results in improvement/additions and alterations 3. 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	1. Agent's commission, advertising, legal expenses and stamp duties for gettingsubsequent tenants 2. 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.	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, maintaining and upkeeping 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	1. Replacements of furnishings (e.g. furniture, fixtures, electrical appliances) to its original state 2. Hiring of furniture	1. Depreciation of furnishings (e.g. furniture, fixtures, electrical appliances) 2. New/Improvements/Additions made to furnishings (e.g. furniture, fixtures, electrical appliances)
Internet charges/expenses	Paid on behalf of tenant (as long as not reimbursed by tenant subsequently).	Paid on behalf of tenant, but reimbursed by tenant subsequently.
Utility expenses	Paid on behalf of tenant (as long as not reimbursed by tenant subsequently).	Paid on behalf of tenant, but reimbursed by tenant subsequently.
Expenses incurred on properties that are not generating rental income	N.A.	The relevant expenses incurred on such properties of (e.g. rent, utilities, maintenance, etc) cannot be claimed against the rental income generated from other properties as the expenses are capital and private in nature.

Note 1: Illustration:
(a) Loan obtained (by mortgaging Property A) to purchase Property B.
-    The loan interest is deductible provided rental income is generated from Property B.

(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.

(c) 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.  

(d) 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".

Note 2: As a concession, agent's commission, advertising and legal expenses for getting the first tenant of a subsequent property is deductible against the rental income of that property.

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 expenses incurred based on the number of rooms rented out.

Example 2: How to compute taxable rent if you sub-let a room

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 2013. Your tenant pays you rent of $600 per month. In addition, the total amount of deductible expenses incurred is $3,000.

Your net rent is calculated as follows:

Gross Rent for the year 2013	: $600 x 12 = $7,200
Total claimable expenses incurred	: $3,000
Total number of rooms in your property	: 3 rooms
Total number of rooms rented out	: 1 room
Proportion of claimable expenses allowed	: $3,000/3 x 1 = $1,000

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

 

How to report Rent

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.

For property owned by more than 1 ownerAll owners of the property have to give details of the total annual rent collected, total deductible expenses before showing each of their share of rent.

 

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, the filing deadline, may email us.

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.

Rental losses

If your gross rent from the letting out of properties is less than the deductible expenses, you cannot use the rental loss to set off against any other income (e.g. employment income) that you may have in the same year.

Also, you cannot carry forward these losses to set off against any other income in the future.

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

Example 3: Using the rental loss from one property to offset the rental gain from another property

Property	Rental Gain/(Loss) in the year 2009
A	$30,000
B	($10,000)

Rental gains from property A	$30,000
Less: Rental loss from property B	$10,000
Taxable net rent	$20,000

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

Transfer of rental losses between spouses

A married couple can transfer their rental losses between each other.

You can only offset the amount of rental loss transferred against your spouse's taxable rental income.

Example 4: Using the rental loss from my spouse to offset against my taxable rental income

Husband's taxable rental income in 2013	$1,000
Wife's rental loss in 2013	$1,500

The wife can transfer $1,000 of her rental loss to be offset against husband's rental gain.