Claim for Rental Expenses Simplified
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This can only be claimed for tenanted residential property . From YA 2016 property owners who lease their residential properties will be able to enjoy the convenience of pre-filled rental expenses.
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 interest on the mortgage loan taken out to purchase the rental property. You need to keep and be able to produce the supporting documents relating to the mortgage interest for at least 5 years for verification purposes. You do not have 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 residential property.
Points to note
A residential property does not include any property that has been given approval for any non-residential use such as that of a childcare centre and workers' dormitory.
The deemed expenses option is not applicable under the following circumstances:
- You did not incur any deductible expenses (apart from mortgage interest) in respect of the rental income derived
- You derived the rental income through a partnership in Singapore
- You derived the rental income from a property held under a trust.
For Tenanted non-residential property
Only claim the actual rental expenses incurred can be claimed. You are required to keep the supporting documents for at least 5 years as evidence to support your claim.
How do you claim the 15% deemed rental expenses?
You have rented out your residential property at a gross rent of $6,000 per month from 1 Jan 2015 to 31 Dec 2015. 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:
Example Rental Expenses Gross Rent for the year 2015 | : $6,000 x 12 = $72,000 |
Mortgage interest | : $13,000 |
Other expenses | : $72,000 x 15% = $10,800 |
Net Rent
= $72,000 - $13,000 - $10,800
= $48,200
What if you are subletting a room in your home?
If you are living in a four-room flat with three bedrooms and should you sublet one of the rooms from 1 Jan to 31 Dec 2015. 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:
Example Rental Expense Calculation Rental Period from 1 Jan to 31 Dec 2015 | Computing Net Rent based on Actual Expenses Incurred | Computing Net Rent based on Simplified Claim for Rental Expenses |
Gross Rent for 2015 | $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) |
The figures calculated above are so as you have to 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 as dealt with in this piece.