TIPS FOR FIRST-TIME LANDLORDS  Reference:   CAPITAL EXPENSES NOT DEDUCTIBLE  Straits Times June 19, 2002. pg. 19, Forum,  Reply from Lee Leng Kiong, Manager (Corporate Communications), Inland Revenue Authority of Singapore (IRA) FIRST TENANT To elaborate, what Mr Lee says is as follows: The Landlord spends money to get the first tenant. 1.  The cost of getting the first tenant include the agent's commission, advertising costs, legal costs and other expenses.  It also includes buying the furniture and installing fittings. All these costs cannot be deducted from the rental income as the IRA classify such expenses as CAPITAL EXPENSES.  2.  However, subsequently, these costs ARE deductible. Therefore, the practical thing to do is to minimise expenditure on furniture and fittings if possible. However, cheap items do not attract good tenants or tenants at all!  It is best to rent your property at a lower rental and not include furniture as the next tenant may not want them.  DEPRECIATION 1.  If you have a trade, business or vocation, you can deduct depreciation of furniture and fittings against income over a period of years e.g. 5 years. The law does NOT allow you to do so if you have rental income. Therefore, you cannot deduct a certain percentage of the furniture and fittings over the next 5 years if you are a residential landlord.   2.  However, you can deduct expenses incurred in the repair of replacement of furniture for the year under assessment. Therefore, your furniture cost e.g. $3,000 can be deducted from the gross rental income of e.g. $20,000 and your net rental income is $17,000 for taxation purpose. Mortgage interests are also deductible if you rent your property but not if you live in it.  www.asiahomes.com .