How can Landlord saves tax on the Rental Income?

According to Inland Revenue Authority of Singapore (IRAS) *, rental expenses are expenses which are wholly and exclusively incurred in the production of your rental income. These expenses can be deducted from your rental income, which helps you to save tax :-)

For an expenses to be deductible from rental income derived from Singapore, the expenses must be incurred :

1) Solely for the purpose of producing the rental income; AND

2) During the period of tenancy.

These expenses are deductible according to IRAS :

1) Housing Loans - Interest paid on the loan or mortage is deductible.

2) Property Tax is deductible

3) Repairs done to restore the property to its original state is deductible

4) Property Agent's commission, advertising, legal expenses for getting subsequent tenants (2nd tenants and onwards; not applicable to 1st tenant). Or, the cost of renewing a lease or changing a tenant.

Some examples of what are not deductible are depreciation of furnishing (eg. furniture, fixtures, electrical appliances). These apply to purchased furnitures that the Landlord buys upfront (personally owned) to furnish their property for the purpose of renting. Please note, these expenses is not deductible. This is where it gets alitte confusing for most landlord. In the example of furniture rental and appliance rental, you can reduce your property rental taxable income if you rent furnitures to furnished your property.

For example, if you are renting your fully furnished apartment at $5000 per month, of which, $500 goes to the furniture and appliance rental (payable to a home furniture rental company) , hence effectively, your taxable rental income is $4500 per month. Annualised, that is a saving of $6000 of rental taxable income.

Chew on it...

* The above information provided is accurate at the time of writing this article. The author will not be held liable in any event should the policies and tax related guidelines change. Reader are advised to always refer to IRAS for any tax related subjects and it's most up-to-date guidelines.