Tax reliefs for your property rental income

It is tax season and this is for landlords a busy period. Do you have to include rental income in your tax declarations? And if so, are there any reliefs or expense you can legally claim?

Rental income must be declared

All income received from letting out a property must be declared in income tax returns. But there are expenses which can be claimed.

What do you have to declare?

  • Gross rent – This is the total amount of rent and any related payments from the tenants such as from the use of furniture and fittings.

What can you claim as rental-related expenses for tax relief?

  • Method 1 – There is a 15% rental expense deduction which IRAS has been offering as an option since 2016. This is helpful for landlords who may not have records of actual expenses or for this whose actual rental expenses are lower than 15% of the gross rental income.
  • Methods 2 – For landlords whose mortgage interest, repairs and maintenance add up to be more than 15% of the rent collected, they may opt to claim for these items with substantiated receipts or invoices. Documental proof must be kept for a period of 5 years for IRAS’ verification should the need arise.

What qualifies as rental-related expenses

Now the question then comes down to, what qualifies as claimable rental-related expenses?

  1. Interest on housing loan – Only the interest is claimable. Not the actual principal mortgage sum itself.
  2. Property tax – The property tax paid during the rental period is claimable.
  3. Repairs – Only repairs made to restore the property to its original state during the rental period can be claimed. Work done before the property was rented out or to make alterations or additions to the property cannot be claimed.
  4. Maintenance – Costs for painting, pest control and maintenance charges to condominium management corporations can also be claimed.

IRAS has a comprehensive guide to property tax declarations and reliefs under their Rental Income and Expenses section on their website. The tax filing deadline is April 15 for paper returns and April 18 for e-filing.