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280 Landlords Caught by IRAS: 5 Costly Mistakes to Avoid

Letto Team·February 9, 2026·7 min read

280 Landlords Caught by IRAS: 5 Costly Mistakes to Avoid

IRAS does not take rental income compliance lightly. In a targeted audit of approximately 450 landlords, over 280 cases — more than 60% — were found to have under-reported rental income or incorrectly claimed expenses. In 2021, a landlord became the first in Singapore to be convicted for obstructing a tax investigation.

These are not cases of deliberate fraud. Most were honest mistakes made by landlords who did not fully understand the rules. Here are the five most common errors and how to avoid them.

Mistake 1: Thinking Property Tax Covers Rental Income

Some landlords believe that because they already pay property tax, they do not need to separately declare their rental income. This is wrong.

Property tax and income tax on rental income are two completely different taxes:

  • Property tax is a tax on property ownership, based on the Annual Value of the property. You pay it whether you rent out the property or not.
  • Income tax is levied on the actual rental income you receive. You must declare it in your annual tax return.

Paying one does not exempt you from the other. If you earn rent, you must declare it — regardless of your property tax status.

Mistake 2: Claiming Renovation Costs as Deductible Expenses

This is one of the most common errors IRAS finds. Landlords renovate their property before renting it out and then deduct the renovation costs from their rental income.

IRAS classifies renovations as capital expenditure — money spent to improve or enhance the property beyond its original state. Capital expenditure is not deductible against rental income.

Only revenue expenditure — money spent to maintain or restore the property to its existing condition — is deductible. The distinction:

| Deductible (Revenue) | Not Deductible (Capital) | |----------------------|-------------------------| | Repainting walls | Renovating the kitchen | | Fixing a leaking pipe | Installing a new bathroom | | Replacing a broken aircon with equivalent model | Upgrading to a more expensive aircon system | | Patching damaged flooring tiles | Replacing vinyl with marble | | Servicing existing fixtures | Adding built-in wardrobes |

If you renovated before your first tenant moved in, none of those renovation costs can be offset against rental income. They are considered capital improvements to prepare the property for rental — not expenses of producing rental income.

Mistake 3: Joint Owners Not Splitting Income Correctly

If you and your spouse (or anyone else) jointly own a rental property, each owner must declare their share of rental income separately in their individual tax returns. The split must follow the legal ownership share, not who manages the property or collects the rent.

Common errors:

  • One owner declares all the income. If ownership is 50/50, each person must declare 50% of the gross rent and can claim 50% of the expenses.
  • Splitting by verbal agreement rather than legal ownership. IRAS follows the legal ownership structure, not informal arrangements.
  • Forgetting to split expenses. Both income and deductible expenses should be divided by the same ownership ratio.

If the property is held under joint tenancy, the assumption is equal shares. If it is held under tenancy-in-common, the declared shares determine the split.

Mistake 4: Using Estimates Instead of Actual Figures

IRAS requires you to declare the actual amount of rental income received during the year. Yet some landlords round numbers, estimate based on the monthly rate, or use approximate figures.

Common problems:

  • Not adjusting for rent increases. If rent was $3,500/month for the first half and $3,800/month after renewal, you must calculate and declare the actual total — not simply $3,500 × 12.
  • Estimating expenses. If you claim actual expenses, they must be based on real invoices and receipts, not ballpark figures.
  • Not accounting for partial months. If the tenancy started mid-month, the rent for that period is the actual pro-rated amount received, not the full month.

Keep records of every payment received and every expense incurred. The actual figures should come from your bank statements, receipts, and tenancy agreements — not from memory.

Mistake 5: Not Verifying IRAS Pre-Filled Information

When you e-file your tax return, IRAS may pre-fill rental income information based on tenancy agreement stamp duty records. Many landlords assume this pre-filled data is correct and submit without checking.

Problems with pre-filled data:

  • Rent may have changed. If you renewed the lease at a different rate, the pre-filled amount may still reflect the old rent.
  • Partial-year rentals. If the property was rented for only part of the year, the pre-filled data might assume a full year.
  • Multiple tenants. If you had one tenant leave and another move in at a different rate, the pre-filled figures may not capture this.
  • Furnishing or maintenance charges. Separately billed charges may not be reflected in the pre-filled data.

Always verify the pre-filled amounts against your own records. You are responsible for the accuracy of your tax return, regardless of what IRAS pre-fills.

The Penalties

Getting it wrong is not just an inconvenience. IRAS penalties for underreporting rental income are significant:

| Situation | Penalty | |-----------|---------| | Underreported income (no fraud) | Up to 200% of the tax underreported | | Late disclosure | Additional 5% per year of delay | | Obstruction of investigation | Criminal conviction, fines, imprisonment | | General non-compliance | Fines up to $5,000 plus interest on unpaid taxes |

In the 2021 conviction case, the landlord was found guilty of obstructing IRAS investigators — a criminal offence. While most cases result in financial penalties rather than prosecution, IRAS has made clear that it takes rental income compliance seriously.

How to Protect Yourself

Make a Voluntary Disclosure

If you realise you have made errors in past filings, IRAS offers a voluntary disclosure programme. Coming forward before IRAS finds the error significantly reduces penalties. The earlier you disclose, the lower the penalty.

Keep Organised Records

Most of these mistakes stem from poor record-keeping. When records are scattered across WhatsApp messages, emails, and loose receipts, errors are almost inevitable. The landlords who get caught are rarely trying to cheat — they just did not have their numbers straight.

Practical steps:

  • Record every rental payment received with the date and amount
  • Keep every receipt for every expense, organised by property and category
  • Retain all tenancy agreements, including renewals with updated terms
  • Store bank statements showing mortgage interest breakdowns
  • Keep all documents for at least 5 years from the Year of Assessment

Verify Before You Submit

Before filing your tax return each year:

  1. Calculate your actual gross rent from records — do not rely on pre-filled data
  2. Confirm your expense method (deemed 15% or actual) is optimal
  3. Check that joint ownership splits are correct
  4. Ensure no capital expenses are mixed in with deductible expenses
  5. Cross-reference your claimed expenses against your receipts

Key Takeaways

  • Over 60% of audited landlords had errors in their rental income reporting
  • The five most common mistakes: conflating property tax with income tax, claiming renovations, incorrect joint ownership splits, using estimates, and trusting pre-filled data
  • Penalties can reach up to 200% of the underreported tax
  • Voluntary disclosure significantly reduces penalties
  • Organised record-keeping is the single best defence against accidental non-compliance