Rental Income Tax Singapore: What You Actually Owe IRAS
Singapore does not have capital gains tax, but it does tax rental income — and plenty of landlords file incorrectly because they do not know the difference between the two methods IRAS allows, or which expenses are actually deductible.
Here is the complete picture, including the one deduction that almost no one claims who should.
The Basic Rule: Rental Income Is Taxable Personal Income
If you own a property and rent it out, the net rental income is added to your other assessable income and taxed at your personal progressive rate. For the 2025 Year of Assessment (YA2026), the resident individual income tax rates range from 0% on the first S$20,000 to 24% above S$1,000,000.
Rental income must be declared in your annual personal income tax return, even if the rental barely covers the mortgage. There is no minimum threshold below which rental income is exempt.
Joint Ownership: Each Owner Pays on Their Own Share
If you co-own a rental property with your spouse, each owner is taxed on their respective share of the rental income — regardless of which bank account receives the actual rent. The income is apportioned strictly according to legal ownership percentages.
For a couple holding 50-50, each reports half the rental income on their individual returns. This matters for tax planning: the higher-earning spouse may benefit from holding a smaller ownership share, keeping the rental income out of their higher marginal bracket.
Two Methods to Calculate Taxable Net Rental Income
IRAS gives individual owners of residential properties a choice between two methods for deducting expenses against gross rental income.
Method 1: Deemed Rental Expenses (The Simplified Option)
Under the deemed expense method:
- You deduct 15% of gross rental income as a flat-rate allowance covering all property-related operating expenses
- You additionally claim the actual mortgage interest paid during the tenancy period
No receipts are needed for the 15% portion. However, you must retain mortgage interest statements for five years.
Example:
- Gross monthly rent: S$4,000
- Annual gross rent: S$48,000
- Deemed expenses (15%): S$7,200
- Actual mortgage interest (assumed): S$14,400
- Net taxable rental income: S$26,400
This method is simple and works well when your actual operating costs (property tax, maintenance fees, agent commissions for renewals) are low relative to your rental income.
Method 2: Actual Expenses (The Detailed Option)
You deduct only the actual costs incurred, provided they were:
- Incurred solely to produce the rental income
- Incurred during the tenancy period (not during vacancy, unless you can show you were actively seeking tenants)
- Backed by receipts and invoices retained for five years
Allowable actual expenses include:
- Property tax (prorated to rental period)
- Mortgage interest on the loan taken to purchase the property
- MCST maintenance fees and sinking fund contributions
- Repairs and maintenance during the tenancy
- Pest control, utilities (if landlord-paid), insurance
- Letting commission paid to secure subsequent tenants
Not deductible:
- Letting commission and marketing costs to secure the first tenant — IRAS classifies these as capital expenses
- Renovation and improvement costs — these are capital expenditure, not revenue expenses
- Personal expenses unrelated to the property
Choose the actual expenses method when your real costs significantly exceed 15% of gross rent — typically when the property has high maintenance fees, frequent repairs, or you are paying a property manager.
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Vacancy Periods Between Tenancies
Expenses incurred during a vacancy between two consecutive leases are deductible, but only if you can demonstrate you were actively marketing the property during that period. Keep records of CEA-registered agent engagements, listing advertisements, and any correspondence with prospective tenants.
If you simply let the property sit vacant and incur costs, IRAS may disallow the deduction.
Rental Losses: Limited Pooling, No Carryforward
If your net rental income is negative (expenses exceed gross rent), the rules are restrictive:
- Rental losses from one property cannot be offset against your employment income or other active income sources
- Rental losses can be pooled across multiple rental properties you own in the same year
- Unused rental losses cannot be carried forward to future Years of Assessment
This means a landlord running a net rental loss on one property cannot reduce their salary income tax by the same amount. The loss can only help offset rental profits from another property in the same year.
Non-Residential Properties: No Deemed Expense Method
The 15% deemed expense option is only available for residential properties held by individual owners. Non-residential properties (offices, retail, industrial) must use the actual expenses method. There is also no deemed expense option for properties held under a partnership or a trust.
The Non-Resident Rate: 24% Flat
If you are a non-resident individual — a foreigner living overseas who owns a Singapore rental property — your rental income is taxed at a flat rate of 24%, with no personal reliefs or progressive rates available. Non-residents can still deduct actual allowable expenses or claim the deemed 15% expense deduction (for residential properties).
Practical Tax Planning Considerations
Three factors have the biggest impact on your annual rental tax bill:
1. Ownership structure at purchase. Allocating a larger ownership share to the lower-income spouse reduces the effective marginal tax rate applied to rental income. This requires Tenancy-in-Common registration with the specific percentages. Joint Tenancy defaults to 50-50.
2. Interest deductibility window. Mortgage interest is only deductible while the property is actually let out. If the property is vacant, you cannot claim that month's interest — unless you can prove active marketing efforts. Plan tenancy transitions carefully to minimize unclaimable vacancy months.
3. Deemed vs actual expenses: Run both calculations annually. The 15% deemed method is often better in the early years when the property is new and maintenance costs are low. As the property ages and repair bills increase, actual expenses may produce a lower taxable figure.
The Singapore Investment Property Guide includes worked net rental income calculations using both methods, alongside a model for projecting post-tax rental yields across a range of gross rent levels and marginal tax rates.
Tax treatment reflects IRAS rules as of YA2026. Individual circumstances vary — consult a qualified tax advisor for personal guidance.
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