Guidelines On Singapore Private Residential Properties Taxation

Reference : Inland Revenue Authority of Singapore (IRAS)

What kind of tax do I have to pay for purchase of private residential property?

All purchasers have to pay a stamp duty tax equal to (the purchase price x 3%) - $5,400.

For example, a $1mil SGD property
= $1,000,000 x 3% - $5,400
= $30,000 - $5,400
= $24,600

The stamp duty tax is payable upon completion of the property transaction.


What are the Property Tax Rates?

4% of annual value for owner-occupied properties
10% of annual value for 2nd properties and others (if any)

The annual value is determined by Valuation Review Board of the IRAS usually based on a average rent of similar properties.

The property tax is payable upon 1 month from the completion of the purchase of property and every January subsequently.


Do I have to pay capital gain tax?

Currently, there is no capital gain tax. In fact, the Singapore government encourages foreign investments in property.


Rental Income
1. How do I declare rent income received from my property?

You have to report the total rent received from the tenant. Total rent includes charges on the property, the furniture and fittings and service charges.

If you are claiming expenses on the property, you need to show the details of the expenses claimed. Generally, you can only claim expenses incurred during the period of tenancy. Expenses incurred outside the period of tenancy cannot be claimed. However, if you can show intention to let out the property, we may consider the expenses.

The total rent and deductible expenses claimed must be reported when filing your income tax. You will be taxed on the net rent, which is the total rent less total deductible expenses.


2. What expenses are deductible from my rent/net annual value (NAV) for income tax purposes?

The following are deductible for income tax purposes.
· interest on your mortgage loan
· property tax
· fire insurance on your property
· repairs and maintenance which can include painting, pest control, and monthly maintenance charges to management corporations
· commission paid on getting a subsequent tenant
· cost of renewing a lease or getting a new tenant (except for the first tenant)

The following are NOT deductible for income tax purposes.
· mortgage or bank loan repayments
· agent's commission, advertising, legal costs, for getting the first tenant
· depreciation of furniture and fixtures
· costs of renovation, additions, and alterations to your property, for example extension of car porch, construction of drains, cementing of walls and floors, and installation of window grilles


3. Do I need to submit receipts and documents together with my income tax form to support my claim for deductible expenses?

You do not need to submit supporting documents together with your income tax form. You are however, required to keep these documents for 7 years for verification purposes.


4. If my total rent is less than my deductible expenses, do I need to report my loss in rent in the income tax form?

Yes, you have to report your total rent and details of the deductible expenses in your Income tax form even if you made a loss in rent.


5. Can I deduct last year’s loss in rent against this year’s gain in rent or against other income?

No, you cannot deduct the loss in last year’s rent against this year’s rent. You also cannot offset the loss in rent against any other income you may have.


6. I own two properties. Can I deduct my loss in rent from property A against the gain in rent from property B?

Yes, you can deduct the loss in rent from property A against the gains in rent from property B if both properties are treated as a single source of income for the same calendar year. You will only be taxed on the net gain from these two properties. If the final amount is still a loss, you cannot offset this loss in rent against any other income you may have.


7. I own a property with my brother at half share each. We received rent of $6,000 for Jun-Dec 2002 and $30,000 for Jan-Dec 2003. The expenses were $7,500 for Jun-Dec 2002 and $17,000 for Jan-Dec 2003. Hence, we have made a loss of $1,500 for Jun-Dec 2002 and a gain of $13,000 for Jan-Dec 2003.

a. Can I report all the rent from Jun 2002 - Dec 2003 in the Income tax return for Year of Assessment 2004?

No. You need to apportion the total rent and the deductible expenses according to your share in the property for each calendar year. You need to show separately how you arrive at the loss or gain in the Income tax return for Year of Assessment 2003 and again in the Income tax return for Year of Assessment 2004.

b. Can I report all the rent under my name?

No. As your brother is a co-owner of the property, he must also report his share in his Income tax form.

You will have to declare the rent according to your share in the property. Since you and your brother each own a half share of the property, you will report a loss of $750 ($1,500 / 2) in the Income tax return for Year of Assessment 2003 and a gain of $6,500 ($13,000 / 2) in the Income tax return for Year of Assessment 2004.


8. My tenant paid the rent for Oct-Dec 2003 only in Jan 2004. Do I include this amount in my Income tax return for Year of Assessment 2004?

Yes. You need to include this amount as the rent was due to you in 2003. It does not matter if the rent was received at a later date.

If you have already submitted your Income tax return for Year of Assessment 2004, you can write to IRAS informing us of the rent you received.


9.What is the tax rent for rent income?

Rent income is taxable at 20% with effect from 2005.