Tenancy-in-common to save on rental tax

[ParcImperial]

Hi,

Can anyone advice how tenancy-in-common (as opposed to joint-tenancy) can help to save on rental taxation?

Thanks in advace!

[spikey69]

Hi,

Can anyone advice how tenancy-in-common (as opposed to joint-tenancy) can help to save on rental taxation?

Thanks in advace!

really? That's interesting...I would like to know too

[ParcImperial]

The rental tax is based on rental income earned by each individual co-owners. For joint-tenancy, it is 50%-50%.

For my case, my income tax bracket is higher than my wife. So, if we can arrange, say, 90% of rental income to be filed under her, than we can potentially save a few hundred dollars. Every year. If my wife stops working (i.e. no regular income), then the savings can be more than 2k.

I am not sure if i've miss out something to such a plan.

But do be very aware of the legal implications between joint-tenancy and tenancy-in-common schemes of ownership!

[teddybear]

Don't think you can do that. If you change to joint-tenancy, at most she can only file 50% of rental income with the other 50% by you unless she contribute 90% of the instalment or payment for that property. Even if she pay 90% but her income is that there (meaning the money actually comes from you), you can also be accused of trying to avoid taxes.

The rental tax is based on rental income earned by each individual co-owners. For joint-tenancy, it is 50%-50%.

For my case, my income tax bracket is higher than my wife. So, if we can arrange, say, 90% of rental income to be filed under her, than we can potentially save a few hundred dollars. Every year. If my wife stops working (i.e. no regular income), then the savings can be more than 2k.

I am not sure if i've miss out something to such a plan.

But do be very aware of the legal implications between joint-tenancy and tenancy-in-common schemes of ownership!

[proud owner]

Don't think you can do that. If you change to joint-tenancy, at most she can only file 50% of rental income with the other 50% by you unless she contribute 90% of the instalment or payment for that property. Even if she pay 90% but her income is that there (meaning the money actually comes from you), you can also be accused of trying to avoid taxes.

my wife is not working

we have 80/20 split she 80 i 20 .. for yrs ,..

if anything to argue .. it is to ensure she gets 80 pct of the property should something happens to me .. while i have willed 20 pct of my assets to my siblings ..

nothing legally wrong with that

[ParcImperial]

Don't think you can do that. If you change to joint-tenancy, at most she can only file 50% of rental income with the other 50% by you unless she contribute 90% of the instalment or payment for that property. Even if she pay 90% but her income is that there (meaning the money actually comes from you), you can also be accused of trying to avoid taxes.

It is stated quite clearly in the IRAS website that:
For jointly owned property

The rental income is taxed on all the joint owners based on their share in the property. It does not matter which party receives the rent or whether the owners paid for the property.

http://iras.gov.sg/irasHome/page04.aspx?id=160

[ParcImperial]

my wife is not working

we have 80/20 split she 80 i 20 .. for yrs ,..

if anything to argue .. it is to ensure she gets 80 pct of the property should something happens to me .. while i have willed 20 pct of my assets to my siblings ..

nothing legally wrong with that

Thanks, proud owner!

[teddybear]

That is provided that at the on-set, the property is registered with her having 80% ownership and you having 20% ownership. Is this the case for you? Otherwise don't think that is legally right to do. Your argument will not stand up to scrutiny in court.

Like I said, if jointly owned, then automatically it is assumed 50%-50%. If anybody wants to apportion otherwise, then there need to be a valid reason (this is the case when the way the person apportion results in tax reductions). Otherwise, it is clearly a case of attempting to avoid taxes.

my wife is not working

we have 80/20 split she 80 i 20 .. for yrs ,..

if anything to argue .. it is to ensure she gets 80 pct of the property should something happens to me .. while i have willed 20 pct of my assets to my siblings ..

nothing legally wrong with that

[ParcImperial]

Like I said, if jointly owned, then automatically it is assumed 50%-50%. If anybody wants to apportion otherwise, then there need to be a valid reason (this is the case when the way the person apportion results in tax reductions). Otherwise, it is clearly a case of attempting to avoid taxes.

1) There is no need for justify with "valid reasons" to apportion the ownership of your properties. We are freely decide who are the owners, and the shares of ownership.

2) there is absolutely nothing wrong or illegal about avoiding taxes. Just make sure the way you do it is legal. For example, you can pay less taxes by contributing to SRS (Special Retirement Scheme). Voluntary contribution to some CPF retirement accounts are tax deductible too.