Tax on net rental income.
Tax on rental income
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Net taxable rent
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Your breakdown
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Rent is income, the gain on the flat is not
Singapore taxes the rent you collect, but it is worth being clear about what is and is not in scope. The monthly rent your tenant pays is income, added to your salary and other earnings and taxed at your marginal rate. The increase in the flat’s value while you owned it is not taxed at all, because Singapore has no capital gains tax. So a landlord pays tax on the yield, never on the appreciation. This tool deals only with the income side: it turns gross rent into net taxable rent and applies your marginal rate.
The first decision every landlord faces is how to claim expenses, and IRAS gives you two routes. You can itemise actual deductible costs, or you can take a deemed deduction without keeping a single receipt. This calculator lets you toggle between the two so you can see which leaves you with less taxable rent.
The shortcut most small landlords should use
The deemed route is a genuine convenience for residential landlords. Instead of tracking every repair, agent commission, and maintenance fee, you claim a flat 15 percent of gross rent as deemed expenses, and on top of that you may still add the mortgage interest you actually paid. No documentation of the 15 percent is required. This is a gift to anyone whose real running costs come in under 15 percent of rent, which is common for a newer property with low upkeep. You only need to itemise if your actual deductible expenses, plus interest, genuinely exceed that 15 percent figure.
A $36,000-a-year tenancy, worked through
Take a flat let for $36,000 a year with $8,000 of mortgage interest, using the deemed method, owned by someone in the 11.5 percent marginal band. The deemed expense is 15 percent of $36,000, which is $5,400, and the interest of $8,000 is added on top.
Total deductions come to $13,400, net taxable rent is $22,600, and the tax on it is roughly $2,599. The bar below breaks the gross rent into the deemed slice, the interest slice, and the net rent that actually gets taxed.
A trap with jointly owned property
Here is a mistake I see often. When a flat is owned by a couple, the rental income must be split according to the legal ownership share, not however the couple finds convenient for tax. If the property is held as joint tenants or in equal shares, the rent is taxed half to each, and you cannot quietly assign all of it to the lower earner to save tax. Each owner then declares their share and is taxed at their own marginal rate. The only way to change the split is to change the legal ownership, which itself carries stamp duty consequences.
A second point on the deemed route: it is for residential property only and you must apply it consistently. You cannot take the deemed 15 percent on one property and itemise another in a way that double counts, and the 15 percent is purely a substitute for the running expenses, never for the interest, which is always claimed separately on top. If your property had an expensive year with a major repair or a long vacancy that pushed real costs above 15 percent, switch to actual expenses for that year and keep the invoices.
Can I deduct the principal portion of my mortgage repayment?
No. Only the interest portion of your mortgage is deductible against rental income, never the principal repayment, because repaying principal is reducing a liability rather than incurring an expense. This is why a heavily geared early-stage loan, which is mostly interest, throws off a larger deduction than a near-paid-off loan that is mostly principal. The tool asks for interest specifically for this reason.
Is the property tax on my rented-out flat deductible?
Yes, if you itemise actual expenses, the property tax IRAS charges on the property is a deductible expense against the rental income, along with agent commissions for securing a tenant, fire insurance, and repairs. Note that a tenanted property is assessed for property tax at the higher non-owner-occupier rates, so the bill itself is larger than for a home you live in. If you take the 15 percent deemed deduction instead, you do not separately claim the property tax, since the deemed figure already stands in for these running costs.