Buying a home is one of the biggest financial commitments for Singapore residents. While mortgage payments take up a large part of household budgets, understanding the Mortgage Interest Deduction can help reduce your taxable income and increase your savings. Here’s what every taxpayer should know.
Become Our Featured Tax Expert.
This premium ad space is reserved for one tax professional. Put your firm in the spotlight and reach qualified Singapore leads directly.
To claim this exclusive spot, contact us at [email protected].
📌 What Is the Mortgage Interest Deduction?
In Singapore, individuals who earn rental income from property can claim a deduction for the interest paid on mortgage loans taken to purchase that property. This deduction is allowed only if the property is generating income during the basis period.
✅ Who Can Claim?
- Property owners receiving rental income from residential, commercial, or industrial properties
- Co-owners of a property, based on ownership share
- Individuals who have taken a loan specifically for purchasing the income-generating property
🚫 Who Cannot Claim?
- Owners occupying the property as their primary residence (no rental income)
- Mortgage interest on loans used for purposes other than buying the rental property
- Interest paid during periods when the property was vacant and not available for rent
📝 How to Calculate the Deduction
Only the interest portion of your loan repayments qualifies. The principal repayment is not deductible. If your mortgage payment is S$2,000 a month, and S$800 is interest, only S$800 per month can be claimed.
| Month | Total Payment | Interest Portion | Deductible Amount |
|---|---|---|---|
| January | S$2,000 | S$800 | S$800 |
| February | S$2,000 | S$780 | S$780 |
💡 Claiming the Deduction
You can claim mortgage interest under the “Deductible Expenses” section of your rental income tax return. Ensure you keep:
- Mortgage statements from your bank
- Proof of property ownership
- Rental agreements showing the property was tenanted
📅 Example of Tax Savings
If your total mortgage interest for the year is S$9,600 and your marginal tax rate is 15%, your tax savings would be:
S$9,600 × 15% = S$1,440 in reduced taxes.
⚠️ Important Points
- You cannot claim mortgage interest for periods when the property was not rented
- If you live in the property yourself, no deduction applies
- Only loans used to purchase the rental property qualify
📌 Final Thoughts
The Mortgage Interest Deduction in Singapore is a valuable tax relief for landlords. By keeping accurate records and ensuring your property is consistently rented out, you can maximise this deduction and reduce your overall tax bill.
