You will be able to explain the rules for renting out an HDB flat or private home.
A year after moving in, Hakim had an idea. Their flat had a spare bedroom they used for storage. A colleague of his, new to Singapore, needed a room, and would pay about S$900 a month in this example. That was almost half their cash share of the instalment. Farah asked the question that had tripped up Hakim's classmate in lesson 2.3, Rules that follow you after you buy: are we even allowed?
For a room, usually yes, with conditions. For the whole flat, it depends on the MOP and on HDB's approval. Private homes have their own rules. And in every case, the rent is taxable income.
HDB allows owners to rent out spare bedrooms, as long as they keep living in the flat themselves. This is possible during the minimum occupation period for most flats, though HDB sets conditions on who can rent out, which flats qualify and who the tenants can be.
Before a tenant moves in, the owner has to register the tenancy with HDB, within the time HDB sets, and give the tenant's details. Tenants must meet HDB's requirements, for example on citizenship or the passes they hold, and there is a cap on how many people can live in the flat in total. There is also a minimum length for each rental, so a room can't be let out for a few nights at a time.
For Hakim's colleague, the questions were simple: was the colleague's pass one HDB accepts, would the flat stay under the occupancy cap, and would the tenancy meet the minimum stay? HDB's website listed each condition, and the registration took an evening.
Renting out the whole flat is more restricted. You can only do it after the minimum occupation period has ended, and you need HDB's approval before the tenant moves in. There are conditions on the owners, such as citizenship, and on the tenants, and there is a minimum and maximum period for each approval, after which you apply again.
Approval also changes your costs. Once you no longer live in the flat, it is taxed at non-owner-occupier property tax rates, which are higher, as lesson 7.1, Property tax, fees and upkeep, explained. Your fire insurance and loan terms may also say something about letting the property, so read them, and tell your bank and insurer if required.
Private homes don't have HDB's rules, but they have URA's. There is a minimum stay for rentals, which rules out short-term letting of homes, and a cap on the number of unrelated occupants in a unit. Condos often have their own house rules too, set by the management corporation.
Private owners can rent out the whole home without approval, subject to those rules and to anything in their loan agreement. The same property tax change applies when the owner stops living there.
Check the current HDB and URA rules before you plan rental income, and check them again before each new tenancy. They are revised from time to time, and the minimum stays and occupancy caps are exactly the kind of detail that changes.
Rental income must be declared to IRAS each year, whether it comes from a room or a whole home. You are taxed on the rent minus allowable expenses, and IRAS lets you choose between claiming your actual expenses or a deemed amount. Tax & Reliefs: how your income tax works and the reliefs you can claim, lesson 5.2, Renting out a room or a property, covers what you can deduct and how to declare it.
In the example, Hakim's colleague would pay S$10,800 a year. That isn't S$10,800 of extra money. After tax at their marginal rate, a little more wear and tear on the flat, and higher utility bills, the net is lower. Still worth having for many owners, but worth working out before you count it in your budget.
Whether it is a room or a whole home, a written tenancy agreement protects both you and the tenant. It sets the rent, the deposit, who pays for what, how either side can end the tenancy, and the condition the place must be returned in. Read the fine print: payslips, statements, policies and contracts, module 7, Read a tenancy agreement and its diplomatic clause, teaches you to read one clause by clause, including from the landlord's side.
Farah and Hakim went ahead with the room. They registered the tenancy with HDB, wrote a simple agreement, and added S$10,800 to the income row of their yearly sheet, with a note to declare it on next year's tax return.
The answer depends on what you own and where you are in the MOP. In the activity below, write whether you could rent out a room or the whole home today, and the registration or approval you would need.
Write whether you could rent out a room or the whole home today and the approval you would need.
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