If you own a residential property in Singapore and rented it out, you may have incurred expenses such as advertising costs. If these expenses were incurred during the period of tenancy, you may claim them as tax deductions.
You can choose between claiming your rental expenses based on the (i) 15% deemed rental expense deduction or the (ii) actual amount of rental expenses incurred on a yearly basis.
The following illustration weighs the two options.
A. 15% Deemed Expense Deduction
Illustration: Mr X has rented out his residential property at a gross rent of $5,000 per month from 1 Jan 2019 to 31 Dec 2019. He has incurred expenses on property tax, maintenance fees and fire insurance totalling $6,000. In addition, he paid a housing loan interest of $9,500 in 2019.
| Gross Rent for 2019 (i.e. $5,000 x 12) | $60,000 |
| Deductible expenses incurred (excluding interest) | $6,000 |
| Housing loan interest | $9,500 |
| Deemed expenses (i.e.15% of $60,000) | $9,000 |
For YA 2020, the computation of net rent under the two options is as follows:
| Deduction is claimed on | Actual amount of expenses | Amount of deemed expenses |
|---|---|---|
| Gross Rent | $60,000 | $60,000 |
| Less: Housing Loan Interest | $9,500 | $9,500 |
| Other deductible Expenses | $6,000 | $9,000 (15% of gross rent) |
| Net Rent | $44,500 | $41,500 |
Note for Landlords Renting Out More Than 1 Property
If you have more than one tenanted residential property and opt for the 15% deemed expenses treatment in a particular YA, this claim method is to be applied across all your rented residential properties in that YA. This means you cannot opt for the 15% deemed expenses treatment on one tenanted residential property and claim actual rental expenses on another.
B. Claiming Based on Actual Amount of Expenses Incurred
If you prefer to claim actual rental expenses instead of the simplified 15% deemed expenses claims, your claims must be substantiated with proper receipts or invoices. Relevant records of the actual expenses claimed must be kept for a period of 5 years for verification purposes.
Rental expenses that qualify for deduction include:
1. Interest on Housing Loan
The interest you pay on the loan or mortgage you took to purchase the property that you rented out is probably one of the largest expenses you’ll incur on a recurring basis. While you can’t make claims for the principal loan or mortgage amount itself, be sure to claim your tax deductions for the interest you pay.
2. Property Tax
The property tax that you incurred during the rental period can be claimed.
3. Repairs
Expenses for repair works done within the rental period that restore the property to its original state are allowable deductions. However, expenses for initial repair works done before the property was rented out are not allowable, as are any repair works that resulted in an improvement, additions or alterations made to a property.
4. Maintenance
The costs of maintaining the property (e.g. painting, pest control, maintenance charges paid to management corporations etc.) are also allowable deductions.
For more details and tips on what to look out for when reporting rental income, please visit Rental Income and Expenses.
File your income tax early to avoid the last-minute rush or late filing penalties
Taxpayers who receive notifications from IRAS to file their Income Tax returns should do so by 18 April 2020. Taxpayers are encouraged to file their returns early, via myTax Portal, to avoid the last-minute rush and late filing penalties. For quick access to myTax Portal, taxpayers can also log in directly via the Singpass Mobile app.
For their convenience, taxpayers requiring tax filing assistance are strongly advised to contact IRAS through the following channels instead of visiting IRAS:
- AskJamie, a virtual assistant on tax filing matters
- Call 1800 356 8300 or chat online (Mon-Fri, 8 a.m. to 5 p.m.)
- Send an email via myTax Portal
Taxpayers who wish to seek assistance at IRAS are advised to make an appointment at least 2 working days in advance.
Taxpayers could also visit the Our Tampines Hub Integrated Public Service Centre, which will be providing assistance on Income Tax e-filing (Mondays to Sundays, 9 a.m. to 10 p.m., except Public Holidays) starting this year.
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