Rental income tax is accrued when you collect a monthly payment from your rented-out properties. While renting out secondary properties is not a job or form of employment, it is still considered a source of income. This means you need to pay rental tax on the income you earn.
With the rental market in Singapore booming and rents for private homes and HDB flats at an all-time high, many may be eager to lease out a room in their homes or delve into buying an investment property to rent out.
But before we do that, it’s important we know how to calculate our rental income tax in Singapore and how to get a deduction.
What Is Rental Income?
According to the Inland Revenue Authority of Singapore (IRAS), rental income is defined as “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”.
For example, John is renting out a property and has a tenant who is paying $3,000 monthly for the entire place. On average, utilities cost $200 monthly.
Hence, John collects a gross rental income of $3,200 per month.
Paying Rental Income Tax: What Else Does IRAS Need to Know?
Your rental income in Singapore is taxable. Failure to declare and pay your taxes could result in you being charged in court, after which you’ll have to pay both your taxes and any penalties.
When renting your property, you’ll need to inform IRAS within 15 days for property tax purposes. However, if you process the lease document digitally via IRAS’ e-Stamping Portal, IRAS will automatically be informed.
And you cannot randomly decide to increase your rent. If the need arises to adjust the rent amount on the existing tenancy agreement, you’ll need to complete and submit the Variation of Lease or Supplemental Agreement within 15 days after the adjustment. Stamp this digitally via IRAS’ e-Stamping Portal, and IRAS will automatically be informed.
If e-Stamping is not required or 15 days is too difficult a deadline for you due to whatever circumstances, you’ll also need to inform IRAS within 15 days. Any non-compliance with any of the above might get you slapped with a fine of up to $5,000 plus interest on the tax (if any).
How Much Is Property Tax in Singapore?
As long as you own a property, you need to pay property tax. In 2023 and 2024, the Singapore government shared that it would increase property tax rates for both owner-occupied and non-owner-occupied residential properties. Most HDB flat owners are expected to pay more.
Some factors that will affect how much tax you’ll need to pay are your property’s annual value and if you are staying there or not.
Typically, you’ll be taxed more if you don’t stay in the property (yes, even if it’s vacant). However, you’ll pay less tax if you choose to live in the property but rent out part of the home. There are some exclusions, but these won’t apply to most of us.
Do note that if you intend to move back into the property after your tenant has ended their lease, you’ll need to reapply for owner-occupier tax rates. If not, you’ll still be charged the higher non-owner-occupier residential tax rates.
Property Tax Rates For Owner-Occupied Property
| Annual value for owner-occupied residential properties | Property tax rate effective 1 Jan 2023 | Property tax rate effective 1 Jan 2024 |
| First $8,000 | 0% | 0% |
| Next $22,000 | 4% | 4% |
| Next $10,000 | 5% | 6% |
| Next $15,000 | 7% | 10% |
| Next $15,000 | 10% | 14% |
| Next $15,000 | 14% | 20% |
| Next $15,000 | 18% | 26% |
| Above $100,000 | 23% | 32% |
Property Tax Rates For Non-Owner-Occupied Property
| Annual value for non-owner-occupied residential properties | Property tax rate effective 1 Jan 2023 | Property tax rate effective 1 Jan 2024 |
| First $30,000 | 11% | 12% |
| Next $15,000 | 16% | 20% |
| Next $15,000 | 21% | 28% |
| Above $60,000 | 27% | 36% |
How to Calculate Rental Tax Income in Singapore
In the rental income example above, $3,200 per month was the total rental income or gross rent John collected.
Your net rental income tax (i.e. gross rental income minus any allowable expenses) will be chargeable, and you can opt for a 15% deemed rental expense deduction. on top of mortgage interest, usually pre-filled in your income tax form; or claim the actual amount of rental expenses incurred.
The deemed expenses option is not applicable if:
- You did not incur any deductible expense apart from mortgage interest
- The rental income was derived through a partnership in Singapore
- The rental income was derived from a property held under a trust
Rental Income Tax Rate in Singapore Formula
Taxable net rental income = [gross rent] minus [allowable expenses (mortgage interest + deemed expenses)]
You can calculate the actual amount of rental expenses incurred, then choose the rental expense deduction route that’ll minimise my taxes.
For example,
- If the actual rental expense deduction is more than 15%: you can use the actual to deduct more and pay less income tax
- If the actual rental expense deduction is less than 15%: you can use 15% to deduct more and pay less income tax
Those who opt to claim the actual amount of rental expenses incurred should retain all supporting documents, such as tenancy agreements, bank mortgage statements, invoices, and receipts, for at least five years. This is for IRAS verification purposes.
If you’re too busy and aren’t really bothered to maximise your profit and reduce your rental income tax rate, using the 15% method is the easiest. Adding to the earlier example:
John is a busy man and hence opts for the 15% deemed rental expense deduction, which brings his net rental income to $2,720/month. He’ll be taxed on this amount by IRAS.
From Year of Assessment 2022, a landlord may also offset his rental income in Singapore by deducting any expenses incurred for repairs, insurance, maintenance, or upkeep of a property when it is empty for any portion of a basis period, as well as any property taxes paid on that property during that vacancy period. This is contingent upon making reasonable attempts to identify a replacement tenant during the vacant period(s) between leases.
If you opt for the 15% deemed expenses route, all your properties will be subject to this claimed method during that year of assessment.
For Rental Income Tax: What Is Taxable and What Is Not?
There are a couple of not-so-clear-cut areas on whether something is taxable or not, but IRAS has done a pretty good job of listing them out. Here’s a quick summary:
|
Item |
Taxable? |
Notes |
|
Rental Deposit |
Yes, forfeiture of the rental deposit is deemed part of your gross rent |
Able to appeal for exclusion if the reason for forfeiture of rental deposit is due to damages to property by tenant etc. Include the reason(s) when filling up your tax form |
|
Subletting (rent out rooms while still staying in your property) |
Yes, rental income is taxable |
Need to apportion the allowable expenses incurred based on the number of rooms rented out |
|
Insurance claims |
Yes, the amount recovered is taxable |
– |
| Tenant rented your property from Oct to Dec 2022. Tenant only paid the rent for this period in Jan 2023 | Yes, you need to declare the rent for Oct to Dec 2022 for the Year of Assessment 2023 as the rent was due to you in 2022 |
Rental income is taxable from the date it is due and payable to the property owner, not the date of actual receipt of payment |
|
I own the property, but I don’t receive the rent |
Yes, you’re still taxed as you’re the owner, even if the rent is being paid to someone else |
– |
|
I am the co-owner of the property |
Yes, taxed according to your legal share in the property (even if you’re not receiving the rent) |
– |
Rental Tax Deductions in Singapore: What Is Tax Deductible?
As long as the cost is incurred by you, during the tenancy period (and in good faith), with no reimbursement from the tenant, it should be tax deductible. We’ve adapted this table from the IRAS website.
|
Type of expense |
Tax deductible? |
Notes |
|
Housing loans |
Yes, for interest paid on the loan/mortgage taken to purchase the rental property (apportioned accordingly if it’s also partly personal use) |
Doesn’t include repayments of the principal loan or mortgage amount in monthly instalments; doesn’t include penalties imposed for late repayment of loans |
|
Property tax |
Yes, for property tax incurred during the rental period only |
Doesn’t include penalties imposed for late payment/non-payment of property tax* |
|
Fire insurance |
Yes, for premiums paid |
Doesn’t include the capital sum assured on property* |
|
Repairs |
Yes, for the cost of repairs done during the rental period, and repairs done during the rental period to restore the property to its original state. |
Doesn’t include repairs before/after rental period; doesn’t include improvement works* |
|
Maintenance |
Yes, for the cost of maintaining the property (i.e. painting, pest control, monthly maintenance charges to building management) |
Doesn’t include improvement works or alterations that are not repairs or maintenance* |
|
Costs of securing tenant |
Yes, for the agent’s commission, advertising, legal expenses and stamp duties for first and subsequent tenants. |
A person may not claim a deduction for a lease or any renewal or extension of a lease for a term that (excluding any option for the renewal or extension of the lease) exceeds 3 years; any acquisition, grant, novation, transfer, or assignment of a lease as a result of the purchase, sale, transfer, or restructuring of any business; or a lease under a contract where the property is sold by and leased back |
|
Costs of supervision or management fees |
Yes, for the costs incurred in engaging a third party to manage your property (i.e. rent collection/upkeep/deal with tenants’ queries) |
If you’re hiring your own relatives or a company you own, you need to justify that the amount paid is at market rate and commensurate with the services rendered* |
|
Furniture and fittings |
Yes, for costs incurred in replacing furnishings to their original state, and renting furniture. |
Doesn’t include the depreciation cost of furnishings or improvements/additions (not for the purpose of repair) |
|
Internet charges/expenses |
Yes, if you’ve paid on behalf of your tenant (tenant doesn’t need to pay you back) |
– |
|
Utility expenses |
Yes, if you’ve paid on behalf of your tenant (tenant doesn’t need to pay you back) |
– |
|
Expenses incurred on properties that are not generating rental income |
No |
These expenses are capital and private in nature |
*This covers expenditures paid during the vacant period(s) in between leases beginning in the year of assessment 2022, provided that reasonable efforts have been made to find a new tenant during the vacancy period in between leases.
5 Scenarios for Rental Tax Deductions in Singapore
1. You Rent Out Your Property and Pay Rent to Live Elsewhere
Sally owns a property along Orchard Road, but she just got a job in Jurong. She decides to rent out her entire Orchard Road property and stays in a Jurong rental HDB flat to be close to the office. Sally cannot deduct the rent she is paying on her Jurong rental unit as renting the place is counted as her own private expense.
2. After Your Tenant Left, You Struggled for a Few Months Before Securing a New Tenant
Jill unexpectedly had a tenant terminate the lease agreement early due to personal reasons. She tried hard to secure a new tenant through advertisements, engaging an agent and so on, but she only managed to secure a subsequent tenant three months later. As a result, her property was left vacant for three months.
As Jill has made a reasonable effort to look for a subsequent tenant, but there were unforeseen circumstances, she can deduct the following:
- Repair, insurance, maintenance, or upkeep of the property when it is vacant
- Interest on her housing loan, which includes the vacant period, for her Year of Assessment
- Property tax during the period of tenancy, including the vacant period, for her Year of Assessment
- Costs of securing the subsequent tenant, which includes the agent’s commission, advertising, legal expenses and stamp duties paid
3. You Renovate Your Property Before Renting It Out to Its First Tenant
Tom buys his first property and renovates it before renting it out. He engages an agent and successfully finds his first tenant for the property. He cannot claim a tax deduction on the renovation works, nor the costs incurred to secure his first tenant (only for subsequent tenants, or first tenants of one’s additional properties).
4. You Own Two Properties and Are Concurrently Renting Them Out
Angeline has a property in Bedok. She buys another in Sengkang. The Bedok property has a long-time tenant, while the Sengkang property needs some repairs before it can be rented out to its first tenant.
Angeline can claim rental tax deductions for the following:
- Mortgage interest on both properties during the respective periods of tenancy
- The property tax paid for both properties during the respective periods of tenancy
- Costs of securing the first tenant of her Sengkang property (first tenant for the additional property)
She cannot claim rental tax deductions for the repairs to her Sengkang property as it wasn’t yet tenanted at that time.
5. You Stay on Your Property and Sublet a Room in Your Home
Francis chooses to stay in his property but decides to rent out one of his three bedrooms. His net rental income is the gross rent for the Year of Assessment minus the deductible expenses (divided by the number of bedrooms). Alternatively, he can deduct 15% from the gross rental rate to derive his net rental income.
Rental Income Tax Filing for Landlords
In summary:
- Taxable rental income = gross rent less allowable expenses
- Allowable expenses = mortgage interest + deemed expenses
- Deemed expenses can be the actual amount of rental expenses incurred OR 15% of the gross rent (simplified); however, you cannot claim deemed expenses (whether actual or simplified) if you haven’t incurred any deemed expenses
- The method of calculation must be consistent for all of your properties
- Keep supporting documents for 5 years
- File early to avoid late filing penalties
Visit IRAS’ myTaxPortal to file your income tax; you can also log in directly via the SingPass Mobile app. If you need tax filing assistance, contact IRAS through chatbot AskJamie, send an email via myTax Portal, call 1800 356 8300 or chat online (available Mondays to Fridays, 8am to 5pm; except on Public Holidays).
If you urgently need to visit IRAS itself, make an appointment at least 2 working days in advance. Alternatively, visit the Our Tampines Hub Integrated Public Service Centre (open Mondays to Sundays, 9am to 10pm, except on Public Holidays).
How Much Should You Rent out Your HDB Flat in 2023?
As expatriates return, BTO construction delays endure, and longer BTO completion times persist, the rental market remains red-hot. If you’re a landlord figuring out how to appropriately price your unit, you can look at the asking prices on the PropertyGuru website or the latest median rental rates by town and flat type for Q3 2022 as a reference.
| HDB towns | 3-room HDB rental flat prices | 4-room HDB rental flat prices | 5-room HDB rental flat prices |
| Ang Mo Kio | $2,290 | $2,600 | $3,000 |
| Bedok | $2,200 | $2,500 | $2,980 |
| Bishan | $2,400 | $2,730 | $3,300 |
| Bukit Batok | $2,000 | $2,500 | $2,800 |
| Bukit Merah | $2,400 | $3,000 | $3,450 |
| Bukit Panjang | $1,700 | $2,300 | $2,500 |
| Bukit Timah | * | * | * |
| Central | $2,600 | $3,500 | * |
| Choa Chu Kang | * | $2,600 | $2,500 |
| Clementi | $2,350 | $3,100 | $3,500 |
| Geylang | $2,200 | $2,600 | $3,200 |
| Hougang | $2,200 | $2,600 | $2,500 |
| Jurong East | $2,200 | $2,800 | $2,900 |
| Jurong West | $2,150 | $2,600 | $2,800 |
| Kallang/Whampoa | $2,300 | $2,900 | $3,200 |
| Marine Parade | $2,300 | $2,650 | * |
| Pasir Ris | * | $2,500 | $2,700 |
| Punggol | $2,750 | $2,800 | $2,800 |
| Queenstown | $2,500 | $3,450 | $3,600 |
| Sembawang | * | $2,450 | $2,400 |
| Sengkang | * | $2,700 | $2,800 |
| Serangoon | $2,300 | $2,750 | $2,850 |
| Tampines | $2,300 | $2,500 | $2,900 |
| Toa Payoh | $2,200 | $2,800 | $3,200 |
| Woodlands | $2,000 | $2,500 | $2,600 |
| Yishun | $2,100 | $2,500 | $2,500 |
We hope this articles has been useful!
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