Paper 2 · Taxes & Leasing
Property Tax, GST & Tenancy Stamp Duty (Singapore)
Beyond the one-off stamp duties on a purchase, the exam covers the recurring tax on owning property and the duty on leasing it.
Property tax — based on Annual Value
Property tax is charged on the Annual Value (AV) — IRAS's estimate of the property's gross annual rent if let out. The rate depends on how the property is used:
| Property use | Property-tax rate |
|---|---|
| Residential, owner-occupied | Lower progressive rates — 0% → 32% of AV |
| Residential, not owner-occupied (rented/vacant) | Higher progressive rates — 12% → 36% of AV |
| Commercial / industrial | Flat 10% of AV |
| Portion of Annual Value | Rate |
|---|---|
| First $12,000 | 0% |
| Next $28,000 ($12k–$40k) | 4% |
| Next $10,000 ($40k–$50k) | 6% |
| Next $25,000 ($50k–$75k) | 10% |
| Next $10,000 ($75k–$85k) | 14% |
| Next $15,000 ($85k–$100k) | 20% |
| Next $40,000 ($100k–$140k) | 26% |
| Above $140,000 | 32% |
| Portion of Annual Value | Rate |
|---|---|
| First $30,000 | 12% |
| Next $15,000 ($30k–$45k) | 20% |
| Next $15,000 ($45k–$60k) | 28% |
| Above $60,000 | 36% |
Income tax on rental income
Property tax and income tax are two different taxes that can hit the same flat in the same year. Property tax is a tax on ownership, charged on the AV whether the place is lived in, rented or empty. Income tax is a tax on the rent you earn from it. The syllabus asks you to *interpret what expenses are or are not deductible from rental income* — so the question is never just "is rent taxable?" (it is) but *what comes off it first*.
Rent is passive income taxable under section 10(1)(f) of the Income Tax Act, and it is the net rent — gross rent minus allowable expenses — that is added to the owner's other income and taxed at their personal rates. Three points about the gross figure catch candidates out:
- Gross rent is more than the rent. It includes rent for the premises, rent for the furniture and fittings, and any maintenance or service charges the tenant pays under the tenancy agreement. A forfeited deposit is taxable too (though the cost of repairing the damage that caused the forfeiture is deductible).
- **Timing runs on when the rent is *due and payable*, not when it arrives. Rent for Oct–Dec 2025 that the tenant only pays in Jan 2026 is 2025 income, declared for YA 2026**.
- Who is taxed follows the title, not the bank account. A sole owner is taxed on 100% even if a third party collects the rent; joint owners are taxed on their legal share — it does not matter who receives the money or who paid for the property. A rental loss is apportioned the same way, and cannot be set off against other income such as salary.
| Type of expense | Allowable | NOT allowable |
|---|---|---|
| Housing loan | The interest on the loan taken to buy the tenanted property | Repayment of principal — the capital half of each instalment; bank late-default charges |
| Property tax | Property tax for the rental period | Penalties for late/non-payment; a balance brought forward from an earlier year |
| Fire insurance | The premiums paid | The capital sum assured |
| Repairs | Repairs during the rental period that restore the property to its original state | Initial repairs; any repair that amounts to an improvement, addition or alteration |
| Maintenance | Painting, pest control, monthly MCST maintenance charges | Renovation, additions and alterations (e.g. window grilles, extending the car porch) |
| Securing a tenant | Agent's commission, advertising, legal fees and stamp duty to obtain, renew or extend a lease — for the first and subsequent tenants alike (from YA 2022) | — |
| Furniture & fittings | Replacing furnishings to their original state; hiring furniture | The initial purchase; depreciation; new or improved furnishings |
| Utilities / internet | Paid on the tenant's behalf and not reimbursed | Paid on the tenant's behalf and later reimbursed by them |
Since YA 2022 a landlord may also deduct repair, insurance, maintenance and property tax for a vacancy period between leases — provided reasonable efforts were made to find a new tenant. Expenses on a property that generates no rent at all (your own home, a unit never offered for letting) remain non-deductible.
The 15% deemed rental expenses option
Rather than tally receipts, an individual letting a residential property in Singapore may instead claim deemed rental expenses of 15% of the gross rent — available since YA 2016 and pre-filled by IRAS in the online return. It stands in place of the actual deductible expenses, but mortgage interest is claimed on top, in full. The landlord takes whichever route gives the bigger deduction, and keeps no receipts for the deemed portion (interest still needs 5 years of records).
- All or nothing across the portfolio. With more than one tenanted residential property, the same basis must be applied to all of them in that YA — you cannot claim 15% on one and actuals on another.
- Residential only. A non-residential tenanted property runs on actual expenses only — and so does a residential property approved for a non-residential use (a childcare centre, a workers' dormitory).
- Three bars. The deemed option is unavailable if the landlord incurred no deductible expense at all apart from interest, or derived the rent through a partnership, or from a property held under a trust.
- Each co-owner chooses for themselves. On a jointly owned flat one owner may take the 15% while another claims actuals — they are not required to match.
Put a number on it. Gross rent of $4,000/month = $48,000 a year, with $7,000 of actual expenses (property tax, maintenance, fire insurance) and $9,500 of loan interest. On actuals, net rent is $48,000 − $9,500 − $7,000 = $31,500. On the deemed basis the expenses are 15% × $48,000 = $7,200, so net rent is $48,000 − $9,500 − $7,200 = $31,300. The interest comes off either way — the only thing the option changes is the $7,000 against the $7,200.
The trap
Three stale or reversed answers on rental income. (1) Deducting the whole mortgage instalment — only the interest is allowable, never the principal. (2) Saying the cost of getting the first tenant is not deductible: that was the old rule, and it changed from YA 2022 — commission, advertising, legal fees and stamp duty are now allowable for the first and subsequent tenants alike. (3) Thinking the 15% deemed expenses include the interest — they don't; interest is claimed in addition.
GST
GST (9%) applies to the sale/lease of commercial and industrial property where the seller/landlord is GST-registered. The sale and lease of residential property is exempt from GST.
Tenancy (lease) stamp duty
A lease attracts stamp duty computed on the rent, usually paid by the tenant: roughly 0.4% of the total rent for a lease of up to 4 years; for a lease over 4 years, 0.4% of 4× the Average Annual Rent (AAR).
Worked example
A condo has an Annual Value of $36,000. If the owner lives in it, the owner-occupier rates give (first $12,000 × 0%) + ($24,000 × 4%) = $960/yr. If it is rented out or left vacant, the non-owner-occupier rates apply: (first $30,000 × 12%) + ($6,000 × 20%) = $4,800/yr — five times the bill on the *same* AV. A commercial unit with the same $36,000 AV is taxed at a flat 10% = $3,600/yr. Same AV, three very different answers — always ask *who occupies it, and is it residential*.
Common mistakes
- Assuming a vacant home keeps the owner-occupier rate — it doesn't.
- Applying GST to a residential sale/lease (it's exempt).
- Mixing up property tax (on AV) with stamp duties (on price) — or with income tax (on the net rent earned).
- Deducting the whole mortgage instalment from rental income — only the interest is allowable.
- Forgetting tenancy stamp duty on the lease (usually the tenant's).
Edge cases & 'what-ifs'
- Vacant residential — no owner-occupier concession; taxed at the higher non-owner-occupier rate.
- Owner lives in it but rents out a room — owner-occupier rate can still apply (you genuinely occupy it); renting out the whole unit moves it to non-owner rates.
- Two homes, and the owner occupies both — owner-occupier rates are granted on one property only; the second is taxed at the higher non-owner-occupier rates even though he lives in it.
- Commercial / industrial — flat 10% of AV regardless of whether it's occupied, vacant or let.
- Owner posted overseas / unit empty — still non-owner-occupier rate unless it genuinely remains your residence per the rules.
- Newly completed (just TOP) — AV is assessed and tax applies once the unit is habitable.
- Tenancy stamp duty scales with rent and term — a longer/ pricier lease costs more (≈0.4%).
The trap
Assuming a vacant home gets the owner-occupier rate — it doesn't; owner-occupier rates require you to actually live there, so a vacant or rented home is taxed at the higher non-owner rate. Also: don't apply GST to a residential sale (it's exempt).
Property tax on the Annual Value
- Property tax is charged on the Annual Value (AV) — IRAS's estimate of the annual rent the property could fetch — not on its price or on the actual rent received.
- Owner-occupied homes get lower, progressive rates; non-owner-occupied (rented or vacant) homes are taxed at higher progressive rates; commercial/industrial property is a flat 10% of AV.
- A vacant property is still taxed on its AV — leaving it empty does not avoid property tax.
GST & tenancy stamp duty
- GST applies to non-residential property (sale and lease) where the seller/landlord is GST-registered; the sale and lease of residential property is exempt.
- A tenancy attracts lease stamp duty at 0.4%, normally paid by the tenant.
Exam takeaway
Split the taxes by timing & type: stamp duties (one-off, on purchase), property tax (recurring, on AV — owner-occupier vs not vs flat 10% commercial), income tax (on the net rent, after allowable expenses or the 15% deemed expenses plus interest), GST (non-residential only), and tenancy stamp duty (on the rent).
Apply it · the IRAC method
An owner lives in one condo unit and rents out a second private residential unit. He is also considering buying a commercial shop unit from a GST-registered seller, and asks how tax applies across these.
- IIssue: How does property tax differ between the owner-occupied and rented units, is GST payable on the commercial purchase, and is the rental income taxable?
- RRule: Property tax in Singapore is assessed on the Annual Value (AV) of a property. Owner-occupied residential properties are taxed at lower owner-occupier tier rates, while non-owner-occupied (e.g. rented) residential properties are taxed at higher non-owner-occupier tier rates. GST applies to the sale/lease of commercial property (where the seller is GST-registered) but not to residential property. Rental income is taxable income and must be declared, with allowable deductions of qualifying expenses. Confirm current rates and rules with IRAS.
- AApplication: The owner's home is taxed at the lower owner-occupier rates, while his rented second unit is taxed at the higher non-owner-occupier rates on its AV. His commercial shop purchase from a GST-registered seller attracts GST, unlike a residential purchase. His rental income from the second unit is taxable and must be declared to IRAS, net of allowable expenses.
- CConclusion: Advise the owner that the two residential units are taxed at different property-tax tiers, that GST applies to the commercial (but not residential) purchase, and that he must declare the rental income. Direct him to confirm current tiers and rates with IRAS.
Worked case study · Section B style
Mr Lim rents out his condominium unit on a two-year tenancy for $5,000 a month for the whole of 2025. Over the year he pays the 2025 property tax on the unit, fire-insurance premiums, monthly MCST maintenance charges, and $18,000 of mortgage instalments — of which $11,000 is interest and $7,000 is principal. He also paid his salesperson $2,700 in commission to secure the tenant, who is the first tenant this unit has ever had, and spent $9,000 installing new built-in wardrobes before the tenant moved in.
- (i) The full $18,000 of mortgage instalments is deductible against his rental income.
- (ii) The $2,700 commission paid to secure the first tenant is deductible.
- (iii) The $9,000 spent on the new built-in wardrobes is deductible.
- (iv) If he claims the 15% deemed rental expenses instead of his actual expenses, he may still claim the $11,000 of mortgage interest on top.
- A.A. (ii) and (iv) only
- B.B. (i) and (ii) only
- C.C. (ii), (iii) and (iv) only
- D.D. All of the above
Show answer & explanation
Answer: A. (i) is wrong — only the interest on a housing loan is an allowable rental expense. Repayment of the principal is capital, so just $11,000 of the $18,000 comes off the rent. (ii) is correct — and it is the point most textbooks get wrong. Before YA 2022 the cost of getting the *first* tenant was not deductible, but from YA 2022 agent's commission, advertising, legal expenses and stamp duty to obtain, renew or extend a lease are allowable for the first and subsequent tenants alike. (iii) is wrong — new built-in wardrobes are a new addition/improvement, not a replacement restoring the unit to its original state, so the $9,000 is capital and non-deductible. (iv) is correct — the 15% deemed rental expenses stand in place of the *other* actual expenses only; mortgage interest is always claimed in addition. So (ii) and (iv) only → A.
Worked case study · Section B style
An investor owns a vacant commercial shop and a tenanted condo, and signs a new 2-year residential tenancy. • Commercial + residential • A new tenancy
- (i) Property tax is based on Annual Value and still applies to the vacant commercial shop
- (ii) Sale/lease of residential property is generally GST-exempt; commercial is generally taxable
- (iii) The residential tenancy attracts tenancy stamp duty (usually borne by the tenant)
- (iv) A vacant property pays no property tax
- A.(i) and (iv) only
- B.(iii) only
- C.(i), (ii) and (iii) only
- D.All of the above
Show answer & explanation
Answer: C. (i)–(iii) are correct: AV-based tax applies even when vacant; residential is GST-exempt vs commercial taxable; tenancy stamp duty applies. (iv) is the trap.
Ready to test yourself?
Practise exam-style questions on Taxes & Leasing — with instant answers and explanations.
Practise Taxes & Leasing questions →Common questions
- Is GST charged on residential property in Singapore?
- No. GST applies to commercial property (when the seller is GST-registered), but the sale and lease of residential property is exempt from GST.
- Who pays tenancy stamp duty?
- Tenancy stamp duty on a lease is usually paid by the tenant and is computed based on the rent payable over the term of the tenancy.
- Which rental expenses can a landlord deduct from rental income?
- Only expenses incurred to produce the rental income — the revenue side, not the capital side. Allowable: mortgage interest (never the principal), property tax for the rental period, fire-insurance premiums, repairs that restore the property to its original state, maintenance and MCST charges, replacing furnishings, and the commission, advertising, legal fees and stamp duty of securing a tenant (from YA 2022 this covers the first tenant as well as later ones). Not allowable: loan principal, initial repairs, renovation, additions and alterations, new or improved furnishings, depreciation, and any cost reimbursed by the tenant. Confirm the current list with IRAS.
- What is the 15% deemed rental expenses option?
- Since YA 2016 an individual letting a residential property in Singapore may claim deemed rental expenses of 15% of the gross rent instead of adding up the actual expenses — and may still claim mortgage interest on top of the 15%. It must be applied consistently across all their tenanted residential properties in the same Year of Assessment, is not available for non-residential property, and cannot be used where no deductible expense was incurred apart from interest, or where the rent was derived through a partnership or from a property held under a trust. Co-owners of the same property may each choose differently. Confirm the current position with IRAS.
- What is the difference between property tax and income tax on a rented-out property?
- Property tax is a tax on ownership, charged on the property's Annual Value whether it is owner-occupied, rented out or vacant. Income tax is a tax on the rent earned, charged on the net rental income after allowable expenses. Both can be payable on the same property in the same year, and the property tax paid for the rental period is itself one of the expenses deductible against the rental income.
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