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Rent from Property

The term rental income means the full amount of rent and any related payments you receive when you rent out your property. This includes rent of the premises, maintenance, furniture and fittings.

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

Responsibility for Payment

Property tax is a tax on the ownership of property, which is payable by whichever party has a legal or beneficial interest in the property. Usually their name is included in the valuation list as the "owner".

Properties Being Sold or Transferred

The apportionment of property tax liabilities is a private arrangement between the seller and buyer.

Conveyancing lawyers acting for the parties would, in most cases, make the tax adjustments. The IRAS does not apportion the tax liabilities for the parties.

If the property were being sold or transferred, usually the conveyancing lawyer would notify IRAS of the new owner/(s) within one month of the sale or transfer by filing a notice of transfer.

Once the sale or transfer is complete, all property tax, including property tax bills are sent to the new owner. As the property owner the individual/s will be liable for all property tax on the property. 

What if the Property has multiple owners?

All the owners are collectively responsible for paying property tax if the property has more than one owner.

The payment arrangement on the property tax payable is a private matter among the owners. In the event of any outstanding tax, enforcement action can be taken against any owner of the property to recover the tax.

Single Correspondent with IRAS

The IRAS communicates with the owner who is listed first in the Notice of Transfer filed by the seller's lawyer. You must inform the seller's lawyer who should be listed first in the ‘Notice of Transfer’. For HDB flats, IRAS communicates with the main applicant listed in the purchase of the flat.

IRAS will correspond with that person on all property tax matters, including payment of property tax.

There is a need to contact the IRAS If there is a preference among owners on who IRAS should correspond with. Consent amongst the owners must be agreed.

Property Tax Rates and Sample Calculations

Property tax rates on owner-occupied and non-owner occupied residential properties are applied on a progressive scale. All other properties continue to be taxed at 10% of the annual value.

Owner-Occupier Tax Rates (Residential Properties)

Owner-occupied residential properties may be condominiums, HDB flats or other residential properties where the owner lives in the property. Owner-occupied residential properties enjoy owner-occupier tax rates.

Owner-Occupier Tax Rates (Residential Properties)

Owner-Occupier Tax Rates

Annual Value ($)

Effective 1 Jan 2015

Property Tax Payable

First $8,000

Next $47,000

0%

4%

$0

$1,880

First $55,000

Next $15,000

-

6%

$1,880

$   900

First $70,000

Next $15,000

-

8%

$2,780

$1,200

First $85,000

Next $15,000

-

10%

$3,980

$1,500

First $100,000

Next $15,000

-

12%

$5,480

$1,800

First $115,000

Next $15,000

-

14%

$7,280

$2,100

First $130,000

Above $130,000

-

16%

$9,380

See below an example of where AV of Residential Property is $36,000

Residential Property Example

Annual Value ($)

Tax Rate Effective 2015

Property Tax Payable

First 8,000

X 0%

= 0

Next 28,000

X 4%

= $1,120

Property Tax Payable for 2015

= $1,120

Residential Tax Rates (Non-Owner Occupied Residential Properties)

Non-owner occupied residential properties may be condominiums, HDB flats or other residential properties. The owner does not live in the property and, therefore, owner-occupier tax rates do not apply.

The following tax rates apply to non-owner occupied properties. (Please refer to the below exclusion list to see the exceptions).

Residential Tax Rates (Non-Owner Occupied Residential Properties)

Residential Tax Rates

Annual Value ($)

Effective 1 Jan 2015

Property Tax Payable

First 30,000

Next $15,000

10%

12%

$3,000

$1,800

First $45,000

Next $15,000

-

14%

$4,800

$2,100

First $60,000

Next $15,000

-

16%

$6,900

$2,400

First $75,000

Next $15,000

-

18%

$9,300

$2,700

First $90,000

Above $90,000

-

20%

$12,000

Residential properties on the exclusion list will continue to be taxed at 10%.

Properties on the exclusion list

  • Accommodation facilities within any sports and recreational club
  • Chalet
  • Child care centre, student care centre, or kindergarten
  • Welfare home
  • Hospital, hospice, or place for rehabilitation, convalescence, nursing care or similar purposes
  • Hotel, backpackers' hostel, boarding house or guest house
  • Serviced apartment
  • Staff quarters that are part of any property exempted from tax of the Property Tax Act
  • Student's boarding house or hostel
  • Workers' dormitory

Planning approval must have been granted for the existing 10% tax rate to apply.

Non Residential Commercial and Industrial

Non-residential properties such as commercial and industrial buildings and land are taxed at 10% of the Annual Value. The owner-occupier tax rates do not apply to non-residential properties even if you have bought the properties for your own occupation.

If the AV of Commercial Property is $48,000

Commercial Property Example

Annual Value ($)

Tax Rate 

Property Tax Payable

48,000

X 10%

= $4,800

Property Tax Payable for 2015

= $4,800

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.

An example if the rental income was due in 2015, but was only paid in 2016.

 

Your tenant rented your property from Oct to Dec 2015. However, he only paid the rent for this period in Jan 2016.

You need to declare the rent for Oct to Dec 2015 for the Year of Assessment (YA) 2016 as the rent was due to you in 2015.

Amount of Taxable Rental Income

For Sole Ownership of Property

  • 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.

For Jointly Owned Property

  • 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. This is based on their legal share in the property.

Rental Expenses

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

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.

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.

Agent's commission, advertising, legal expenses and stamp duties for getting the first tenant.

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 tenant does not reimburse it 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.

*All supporting documents must be kept for at least 5 years in order for the IRAS to verify claims.

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