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Landlord a tax cheat?

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Huseinski
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Landlord a tax cheat?

Postby Huseinski » Tue, 05 Feb 2013 11:01 pm

Another Tenancy Agreement question... My landlord has my "Monthly Rent" set at 3,900 SGD, but it's split:

1,500 SGD is in respect of rental for the Premises
2,400 SGD is in respect of hire of furniture, fittings and fixtures and being the service and maintenance charges payable in respect of the said premises to the Management Corporation.

My place came with a fridge... that's all for furniture. And there's no way that the maintenance charges for this place are anywhere near 2,000 SGD.

I understand that the split is for tax efficiency, but the split seems lopsided.

Is my landlord a tax cheat?

Is this something IRAS would be interested in hearing about (should the LL get on my really bad side)?

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taxico
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Postby taxico » Wed, 06 Feb 2013 12:26 am

the agreement needs to be stamped at IRAS, so the revenue collectors know how much money is exchanged.

if you don't agree with the split, make it known. otherwise, appease the LL, stamp your agreement and don't think too much about it.

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Yes, but...

Postby Huseinski » Wed, 06 Feb 2013 12:36 am

taxico wrote:the agreement needs to be stamped at IRAS, so the revenue collectors know how much money is exchanged.


I don't care one way or the other IF the rent is split (should I?).

I'd just like to know if such a lopsided split is evidence of tax evasion, since the split is for tax efficiency in the first place.

Reason: never hurts to have leverage should the LL become TOO unreasonable (he's had his moments).

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Postby JR8 » Wed, 06 Feb 2013 12:53 am

Your landlord has determined the split, and it has been recorded by the government during the process of stamping. How he reports his tax is none of your concern at all. But has it not even entered your head that the authorities cross-check the stamped rent versus the rent reported to IRAS?

My suggestion is to proceed with goodwill, as otherwise your unnecessarily combative attitude is likely to provoke ill-will and self-protection down the line from the landlord which will only work against you.

aka. 'You reap what you sow'.

Pay attention to that. A landlord of any experience knows how to go into combat with a rogue tenant. The tenant is on unfamiliar territory, where 'I' am the seasoned warrior: brutal if needs be, if you wish to engage me in silly games.


A. Landlord

Huseinski
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Postby Huseinski » Wed, 06 Feb 2013 1:36 am

JR8 wrote:A. Landlord

Ever sued a tenant and won? Was it worth it?

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Postby Huseinski » Wed, 06 Feb 2013 1:42 am

JR8 wrote:My suggestion is to proceed with goodwill, as otherwise your unnecessarily combative attitude is likely to provoke ill-will and self-protection down the line from the landlord which will only work against you.


How do you know my combativeness is unnecessary? I didn't provide any details.

Listen, all due respect, I'm not looking for life lessons, just trying to get some info. I came to the board, asked a question, and got one smartass and one hardass response. I'm new here... I'll chalk it up to me just not understanding the rules... but will somebody cut a newbie some slack and just answer the question, "Is this any evidence of tax evasion?"

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Postby JR8 » Wed, 06 Feb 2013 1:47 am

No of course it's not.

Happy now?

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Postby x9200 » Wed, 06 Feb 2013 8:49 am

I think JR8 was a bit too harsh on you as he has probably already forgotten that majority of local LLs are not neither nice nor ethical and not even come close to his standards. So here it is how I see it:
A LL renting out a property has two basic taxes to pay: for the rental income and the property tax. AFAIK, rental of furniture is taxable the same way as the property rental. As noted the TA goes to IRAS so the LL had to be a complete moron trying to avoid paying the furniture part with such obvious ploy.
The other tax is assessed by IRAS and this is based on the rental (without furniture) as determined by IRAS based on the rental market analysis. Probably some LL think they can influence their decision by defining what is the rental part in the TA. IMO there is nothing illegal in it.
Another possible case are deductible expenses to the rental income and this would be just the same category as for avoiding to pay the furniture part of the rental income.
Lastly, unlike in many other countries, IRAS is pretty friendly and IMHO they don't look around to shoot somebody down and impose fines. I am pretty sure you will not attract their interest with something like this.

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Re: Landlord a tax cheat?

Postby Edroche » Wed, 06 Feb 2013 9:27 am

Huseinski wrote:Another Tenancy Agreement question... My landlord has my "Monthly Rent" set at 3,900 SGD, but it's split:

1,500 SGD is in respect of rental for the Premises
2,400 SGD is in respect of hire of furniture, fittings and fixtures and being the service and maintenance charges payable in respect of the said premises to the Management Corporation.

My place came with a fridge... that's all for furniture. And there's no way that the maintenance charges for this place are anywhere near 2,000 SGD.

I understand that the split is for tax efficiency, but the split seems lopsided.

Is my landlord a tax cheat?

Is this something IRAS would be interested in hearing about (should the LL get on my really bad side)?


Not sure. As long as your agreement stamp duty has been paid and you are paying the agreed rent, all aok. If you are lucky and have a cool agent you may want to check on the stamping part but its usually you that has to pay the small stamp fee. Beyond that, let sleeping dogs lie. Singapore is full of greedy penny pinching landlords that may turn bad on you.

"5. Stamp Duty

In Singapore, Tenancy Agreement will need to be stamped by the Inland Revenue Authority of Singapore. Only after the Tenancy is stamped then it can be considered a valid contract as evidence in court for any disputes that may arise in the future with your landlord. This is to protect the interest of both parties. The stamp duty is usually borne by the tenant."

http://www.iras.gov.sg/irashome/page04.aspx?id=2394

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Postby x9200 » Wed, 06 Feb 2013 9:31 am

Forgot to add: IMHO this kind of split can turn against LL under some, probably rare, circumstances as it indirectly suggests the property is in rather bad condition.

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Postby sundaymorningstaple » Wed, 06 Feb 2013 9:38 am

Huseinski,

Many years ago (around 20 if I remember correctly - last time I was affected by that was from 1988->1991) it was either advantageous or require to split the "in kind" from the "rental" in a furnished rental property. Now it's all taxed the same, but some old LLs still do it that way because the forms are still there. There are some differences in taxation to the Individual if the flat is being provided by the employer to the employee/tenant. But if you are being given a fixed housing allowance, it's of no concern to you as your allowance is taxed in full, regardless how you spend it or whether it's spend on housing or "in kind" for the amenities included therein.

So, my advice.....

Don't get yer knickers in a bunch of it. As to being rough here, we tend to tell it like it is. We don't blow smoke. And we don't take kindly to people who are trying to cause trouble either here on the board or in Singapore. We do not recommend shortcuts or methods that are illegal or unethical. We are guests here and would like to remain appreciated guests (which is getting hard by the day). So, if you were offended, I apologize, but the fact still remains that your post does come across as looking for trouble.

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Postby taxico » Wed, 06 Feb 2013 6:20 pm

Huseinski wrote:Ever sued a tenant and won? Was it worth it?


yes. no.

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Re: Yes, but...

Postby taxico » Wed, 06 Feb 2013 6:26 pm

Huseinski wrote:...I'd just like to know if such a lopsided split is evidence of tax evasion, since the split is for tax efficiency in the first place.

Reason: never hurts to have leverage should the LL become TOO unreasonable (he's had his moments).


as it's been said many times, this is not evidence of tax evasion.

i think it spells doom if you commence a tenancy trying to have "the upper hand" and you feel that he's been unreasonable and could even become more unreasonable.

if you've not returned the signed copies of the TA, i would look else where with a more "compatible" landlord. it is unlikely you will find the "leverage" you want in any legal tenancy transaction in singapore.

but make no mistake - a landlord is not your friend. this is purely a business transaction, no less no more. landlords aim to make money from letting out their property. all the terms and conditions are spelled out in the TA.

if you want to cover your ass, add your own "avoidance of doubt" clauses in. if you want a buddy-buddy type landlord, you are better off looking at someone who's subletting.

additionally, in my experience initially friendly and demure landlords are the ones you don't want to trifle with.

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Postby JR8 » Thu, 07 Feb 2013 2:56 am

x9200 wrote:I think JR8 was a bit too harsh on you as he has probably already forgotten that majority of local LLs are not neither nice nor ethical and not even come close to his standards.


You flatter me sir, and I tip my hat your way.

However, I have had three local SG landlords, and I have never had any kind of notable problem with any of them.

Sometimes I think it comes down to 'seek and though shalt find', i.e. dig hard enough to find a problem (and so forment one) and hey presto you will find one.

p.s. My whole philosophy as a landlord (of, I don't keep track, c80 let/years+, is proceed fairly; treat people how you'd like to be treated yourself.)

It works pretty well with most people, and even after a decent tenant leaves, I'll happily go out of my way to provide references or what ever, to help them on their future journey.

But believe me you do run into some people who really do try and take the p***.

I'm lucky, I think in all these years I've only had two. It's perhaps down to my agents vetting that I've not experienced more.

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Postby x9200 » Thu, 07 Feb 2013 8:37 am

My experience with the local LLs is 2 out of 3 ok. Not that the 2 had been completely without problems but very minor. The current one shows all the bad symptoms except he is not an idiot and is not arrogant. That helps, but if someone decides one day that there should be a metric standard for the kiasuism they should take him and place in Sevres. Anyway, the common perception is that the local LLs are pretty evil and there are not many claiming the opposite. In that respect I think it is understandable to have a backup plan in case some problems with (just an example) recovering of the deposit arise. This is how I understood the OP's question.


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