Rental Income Tax Singapore: How to Calculate and Pay (2023)

Rental Income Tax Singapore: How to Calculate and Pay (2023)

Rental income tax in Singapore is accrued when you collect a monthly payment from the properties you rent out. 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 income tax on the rent you earn.

But before you decide to rent out your home, it’s important to know how to calculate rental income tax, pay for it, and know what is tax deductible.

Rental Income Tax Singapore: Overview

You must pay rental income tax when you	Remarks
Receive your rental deposit	When submitting your tax form, you may be able to appeal for exclusion as ‘compensation’ if the tenant causes damages to your property
Sublet your house	You need to split the allowable expenses incurred based on the number of rooms rented out
Claim insurance	–
Receive your tenant’s rent due from October to December 2022 only in January 2023	You need to declare the rent for October to December 2022 for the Year of Assessment 2023
Own the property but don’t receive the rent	–
Are the co-owner of the property	–

Rental Income Tax Singapore: Scenario

Rental price	$3,000
Utilities	$200
John’s gross rental income	$3,200

John rents out his 4-room HDB flat to a tenant at $3,000 a month. On average, the tenant racks up $200 in utilities, which they pay on top of their monthly rent. This makes John’s gross rental income $3,200.

However, the Inland Revenue Authority of Singapore (IRAS) only seeks to charge John based on the amount of money he ‘earns’ from renting out his 4-room HDB flat.

Since John is still paying off the home loan for his rental property, he will be able to deduct his monthly repayment from his taxable rental income. If he makes other payments to the maintenance of his rental property (e.g. fire insurance), he can deduct that from his taxable rental income too.

Tl;dr, taxable net rental income = Gross rental income – allowable expenses (i.e. mortgage interest + deemed expenses).

What Are Deemed Expenses in Rental Income Tax Singapore?

Deemed expense	Description	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 the 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 a 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 three 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/dealing 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 (the tenant doesn’t need to pay you back)	–
Utility expenses	Yes, if you’ve paid on behalf of your tenant (the 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.

Common Rental Income Tax Deduction Scenarios

Scenario	Can you enjoy any form of rental income tax deduction?
You rent out your property and pay rent elsewhere	No
After your tenant left, you struggled for a few months before securing a new tenant	Yes, the deemed expenses incurred while securing another tenant
You renovated your property before renting it out to your first tenant	No
You own two properties and rent out both of them	Yes, the deemed expenses of the respective properties
You sublet a room in your house	Yes, based on the room that is being sublet out

Rental Income Tax Calculator Vs 15% Simplification of Claims

As mentioned, the formula for calculating rental income tax in Singapore is deducting your deemed expenses from your gross rental income.

However, if you’re like us, you may be a little overwhelmed by the number of rental income tax deduction scenarios. To help bypass the hassle of calculating their deemed expenses every time they need to fill up their rental income tax form, IRAS allows landlords to apply for a simplification of claims deduction, a flat 15% gross rental income deductible instead of the exact rental income tax amount.

This is good news for landlords who are too busy to calculate their exact rental income tax amount and those whose deemed expenses (i.e. their mortgage, maintenance fees, etc.) are less than 15% of their gross rental income (i.e. the total amount of money they receive from renting out their property) – specifically, they ‘earn’ the difference between 15% of their gross rental income and deemed expenses.

Want to Rent Out Your Property in 2023?

We’ve ummed and ahhed about “record-high rent prices” in Singapore for many moons now. The increased BTO flat supply and number of private properties set to receive their Temporary Occupation Permit (TOP) by the end of 2023 will likely help to moderate rental price growth, but as of today (5 July 2023), renting in Singapore is still a landlord’s market.

If you’re thinking about how much to charge for rent based on your HDB flat type and estate, check out our quarterly roundups for HDB rental prices. For other property types, you can filter PropertyGuru listings for a ballpark on what market rates are.

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