RES exam question on Taxes & Duties: Mr Ang, an individual, lets his condominium unit for $60,000 of rent in 2026
Mr Ang, an individual, lets his condominium unit for $60,000 of rent in 2026. He pays $28,000 of mortgage instalments, of which $11,000 is interest, plus $1,900 of property tax, $1,300 of MCST charges and $9,000 for new furniture and a kitchen refit. Which of the following statements is/are correct? (i) Claiming actual expenses, he deducts the $11,000 of interest but not the $17,000 of principal. (ii) The $9,000 for furniture and the kitchen refit is deductible as an outgoing on the let unit. (iii) Since he may elect deemed expenses of 15% of gross rent, that election also covers the interest. (iv) Claiming actual expenses, he deducts the property tax but not the MCST charges, which are an owner's cost.
- A(i) and (iv) only
- B(iii) and (iv) only
- C(i) only
- D(i), (ii) and (iv) only
Show answer & explanation
Answer
C. (i) only
Explanation
Answer: (i) only. Only interest is deductible from the mortgage, capital outlays are not, and MCST charges are allowable.(i) True. Mortgage interest is deductible but principal is not, so only the $11,000 of interest counts, not the $17,000.Rule: Rental income is taxed on the net rent: interest, property tax, fire insurance and MCST charges are allowable, while principal, renovation and new furnishings are not. An individual letting residential property may instead claim deemed expenses of 15% of gross rent, plus mortgage interest in full.Source: IRAS, Rental income, read 1 Oct 2026 (deemed expenses since the Year of Assessment 2016); RESPrep /learn/property-tax-gst-and-leasing
Why the other options are wrong
- (ii) False. The $9,000 for furniture and the refit is capital, not an allowable outgoing.
- (iii) False. The 15% election is real, but mortgage interest is claimed in full on top of it, not inside it.
- (iv) False. MCST charges for the rental period are an allowable expense for a let unit, like property tax and fire insurance.
Study the concept behind this question: Property Tax, GST & Tenancy Stamp Duty in Singapore
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