Singapore – Owners of Rental Property Can Claim ‘Deemed Expenses’ Now

Singapore – Owners of Rental Property Can Claim

In response to Budget 2015, the Inland Revenue Authority of Singapore (IRAS) has published an e-Tax Guide providing additional guidance on the election to claim rental expenses on a ‘deemed’ basis in lieu of actual expenses in determining net taxable income which is available to property owners who derive passive rental income from residential properties. The deemed expense deduction is a further step towards simplification of the tax system in Singapore.


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Singapore’s government first announced in Budget 20151 that property owners who derive passive rental income from residential properties can elect to claim rental expenses on a ‘deemed’ basis in lieu of actual expenses in determining net taxable income. 


The rationale behind the deemed expense deduction is to simplify the tax filing process and alleviate the burden of record keeping for taxpayers.

In response to Budget 2015, the Inland Revenue Authority of Singapore (IRAS) has published an e-Tax Guide2 providing additional guidance.  We have summarized the deemed expense election rule as shown below.

When is the rule effective? Beginning from the Year of Assessment 2016 (2015 calendar year)
Which kind of property is covered by the rule? Rental residential properties only i.e., properties primarily used for private dwelling purposes. Properties used for commercial activities are excluded, and actual expenses must be claimed.
Is the rule available to all property owners? Only individual owners, both resident and nonresident. Corporate landlords are excluded.
How much is the allowable expenses?

Allowable deemed expenses equal to 15% of the gross rental income, notwithstanding lower actual expenses.

Actual mortgage interest expense can still be deductible in addition to the deemed expenses.

Deemed expense is not allowable if:     

-- No actual expense (other than mortgage interest) is incurred;     

-- The rental income is derived through a partnership;     

-- The rental income is derived from a property held under trust;     

-- The individual is carrying on a trade or business of renting out properties.

Is the election binding for all years? No, taxpayers can elect to deduct deemed expense from year to year.
Can the election be revoked? Yes, taxpayers can inform IRAS within 30 days of the Notice of Assessment.
What if there are two or more properties? When elected, deemed expense deduction must be applied to all properties. 
What if the property has two or more owners? Each co-owner can decide whether to elect deemed expense deduction for his share of ownership.
What are the record-keeping requirements? No record of actual expenses need to be maintained if the deemed expense election is made. For claim of actual expenses, records must be kept for a period of 5 years to substantiate the claim.
How to claim deemed expenses? For taxpayers e-filing their return, the deemed expense deduction is the default method unless taxpayers opt out by providing actual expenses in the tax portal. Taxpayers who file paper returns must choose to use deemed expense or actual expense deduction. 


The example below provides an illustration of the deemed expense deduction rule for a rental residential property jointly owned by the taxpayer and spouse. (Note: Under Singapore law, married taxpayers must file separately from their spouse.)

  Actual Expense      Deemed Expense














Gross rent  54,000 27,000 27,000   54,000 27,000 27,000
Less Expenses              
Mortgage interest 24,000 12,000 12,000
Property tax (annual value of $36,000) 3,720 1,860 1,860        
Fire insurance 500 250 250        
Management fee 1,600 800 800        
Deemed expense (15% of gross  rent)         8,100 4,050 4,050
Total Expenses 29,820 14,910 14,910
  32,100 16,050 16,050
Net Income 24,180 12,090 12,090
  21,900 10,950 10,950








The deemed expense deduction is a further step towards simplification of the tax system in Singapore.

In addition, if actual expenses (excluding mortgage interest) are lower than the 15-percent deemed expense deduction, it could be tax advantageous to make the election.  It also dispenses with the need to maintain supporting records.

The Deemed Expense Rate

According to IRAS, the deemed expense rate of 15 percent of gross rent would be a representative proxy rate as it is generally in the line with common expenses (e.g., property tax, maintenance fees, minor repairs, etc.) 

Effective 1 January 2015, non-owner occupied residential properties are subject to property tax at graduated rates ranging from 10 percent to 20 percent of the annual value of the property.  Whether the 15-percent rate would provide sufficient cover for actual expenses (other than mortgage interest) could vary on a case-by-case basis. 



1  For prior coverage of Singapore’s budget, see GMS Flash Alert 2015-038 (13 March 2015).

2  See: Tax Guide ITT Simplification of Claim Rental Expenses for Individuals (PDF 247 KB). 


This article is excerpted, with permission, from “Owners of Rental Property Can Claim Deemed Expenses Now” in Tax Alert (Issue 9, June 2015), a publication of the KPMG International member firm in Singapore. 


For further information or assistance, please contact your local GMS or People Services professional or one of the following professionals with the KPMG International member firm in Singapore:

BJ Ooi, Partner, Head of GMS

tel. +65 6213 2657


Dennis McEvoy, Partner

tel. +65 6213 2645

The information contained in this newsletter was submitted by the KPMG International member firm in Singapore. 

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