September 25, 2009

How to calculate tax on rental income for joint name property?

Assume that you have a joint name property with your wife and this property is rented out. So how do you declare tax on the rental income for this property? Is it based on:
  • Both names in the land/strata title of the joint name property? OR
  • The name(s) listed in the tenancy agreement? OR
  • The name you filled in the form when you stamp your tenancy agreement with the Inland Revenue Department?
Based on the response from Yong Siew Chuen in the Tax Planning section of Personal Money magazine August 2009, the nett rental income should be split according to the respective shares listed in the land/strata title. Following is the exact wordings in the magazine:

"When the respective shares of the co-owners are not indicated in the title, then under the land laws, the co-owners shall be assumed to have equal shares. Where spouses co-own a rental property, each spouse is entitled to a half share of the rental income. Therefore, each spouse should declare his/her half share of the rental income.......It does not matter if the tenancy agreement cites only one spouse as the landlord. As each spouse is legally entitled to a half share of the property, each spouse is entitled to a half share of the income from the property"

No comments:

Related Posts Plugin for WordPress, Blogger...