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 investment and other properties
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.
Reference
: Inland Revenue Authority of Singapore (IRAS)
Read
Next --> Guidelines on Singapore Private Residential Property Financing
& Other Expenses
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