Understanding the True Cost of Being a Landlord in Singapore 2025
Understanding the True Cost of Being a Landlord in Singapore 2025. Recently, we have met a client who would like to shift their residing address to somewhere nearer to the Relative.
It would be from 1 HDB (HDB Ownership) —> moving —> another HDB flat (By Renting)
Personal Reasons for Converting Primary Home to Investment Property
When many would be thinking just have to pay a difference in Rental.
If you rent out your place for $2,000 and you rent another property for $2,400 you just pay the difference of $400.
It is actually not so straightforward when it comes to taxation. Read this and avoid a bill shock when you see your Annual Tax Payable.
( I think $2000 and $2400 as example purpose the actual rental nowadays for a HDB is Ranging $2800-$3800 on Average)
Summary of Financial Impact Original Monthly Rental: $2,000 Total Monthly Deductions: $630 Net Monthly Income: $1,370 Annual Net Income: $16,440 Effective Tax Rate: 31.5%
Note: Calculations exclude other costs like maintenance, insurance, and agent fees. (Assumptions and Figures are just for Educational purpose. Please do your own diligence)
Key Takeaways by understanding the Difference between the tax payable for Owner vs Non Owner Occupied Flats.
Monthly Net Income Breakdown
Original Monthly Rental: $2,000 ($24,000/12)
Actual Monthly Net: $1,370 ($16,440/12)
Monthly Reduction: $630
Tax Impact Percentage
Total Deductions: $7,560 ($2,880 + $2,760 + $1,920) (refer to below breakdown)
Percentage of Rental Income: 31.5% ($7,560/$24,000 × 100)
Property Tax Difference
Owner-Occupied: $320 annually
Non-Owner-Occupied: $2,880 annually Additional Tax Burden: $2,560 annually
Practical Implications Nearly one-third of rental income goes to taxes and contributions Actual rental yield is reduced by 31.5% Monthly cash flow is reduced by $630 Need to maintain proper documentation for tax purposes Consider these costs when setting rental price Plan for quarterly tax payments or set up GIRO
Financial Planning Note For every $2,000 monthly rental collected: $240 goes to property tax $230 goes to income tax $160 goes to Medisave $1,370 remains as net income
Note: These calculations assume no deductible expenses. Actual net income might be higher if there are allowable deductions (e.g., property maintenance, property management service fees).
Cost Comparison: Owner-Occupied vs Investment Property (Annual)
| Category | Owner-Occupied | Investment Property | Difference |
|---|---|---|---|
| Property Tax | |||
| Annual Value | $24,000 | $24,000 | $0 |
| Tax Rate | 0% first $8,000 + 2% next $16,000 | 12% flat | – |
| Tax Amount | $320 | $2,880 | +$2,560 |
| Income Tax Impact | |||
| Rental Income | $0 | $24,000 | +$24,000 |
| Additional Income Tax | $0 | $2,760 | +$2,760 |
| Medisave Contribution | |||
| Additional Contribution | $0 | $1,920 | +$1,920 |
| Total Annual Costs | $320 | $7,560 | +$7,240 |
| Monthly Cost | $27 | $630 | +$603 |
Property Tax Comparison – Case Study
HDB 4-Room Flat Example (Annual Value: $24,000)
Owner-Occupied Tax:
First $8,000: 0%: $0 Next $16,000 at 2%: $320
Total Owner-Occupied Tax: $320
Non-Owner-Occupied Tax (12%): $2,880
Additional Property Tax Cost: +$2,560
Income Tax Impact
Assuming base income of $80,000 + Rental income of $24,000 = $104,000
Original Tax (on $80,000):
First $20,000: $0
Next $10,000 at 2%: $200
Next $10,000 at 3.5%: $350
Next $40,000 at 7%: $2,800
Total: $3,350
New Tax (on $104,000):
First $80,000: $3,350
Next $24,000 at 11.5%: $2,760
New Total: $6,110
Additional Income Tax: +$2,760
Medisave Contribution (Self-Employed) Rate: 8% for income above $18,000 Additional Medisave on rental income: $24,000 × 8% = $1,920
Total Annual Impact Summary Rental Income: $24,000
Extra Property Tax: -$2,880
Extra Income Tax: -$2,760
Extra Medisave: -$1,920
Net Income After Tax: $16,440
https://www.gov.sg/explainers/property-tax-on-residential-property
