Rental property cash flow in Singapore is the rent actually collected, less every cost of owning and operating the unit, including the full mortgage instalment (interest and principal). A property is cash-flow positive when that figure is above zero each month. Because of purchase prices, non-owner-occupied property tax and loan structures, many Singapore residential investments start with a negative figure, which makes it important to calculate the number before purchase rather than after.
This guide sets out the formula, the income and expense lines to include, the property tax bands that apply to investors, the IRAS treatment of rental expenses, a worked example, and the checks that indicate whether cash flow is likely to stay positive.
TL;DR
- Cash flow equals collected rent (after vacancy) minus operating costs, property tax and the full mortgage instalment, including principal.
- Rental yield and cash flow are different measures: yield ignores the loan, while cash flow and cash-on-cash return depend on it.
- Non-owner-occupied residential property tax runs from 12% to 36% of Annual Value, and it is a recurring cost that sits in every projection.
- For income tax, IRAS allows either a deemed 15% expense deduction or actual expenses, and mortgage interest is claimable but principal is not.
- Whether a shortfall is a financing issue or a pricing issue determines the fix: restructure the loan, or reconsider the purchase.
Table of Contents
- The cash flow formula for a Singapore rental
- Income lines to include
- Expense lines and how IRAS treats them
- Property tax: the largest recurring cost for many investors
- Deemed 15% or actual expenses: the tax side
- A worked example with illustrative figures
- Cash flow, yield and cash-on-cash return
- What counts as good cash flow
- Testing whether cash flow will stay positive
- Our perspective
- Running the numbers on haio
- FAQ
- Sources
The cash flow formula for a Singapore rental
The basic relationship is simple: monthly rental income minus total monthly expenses gives net cash flow. The detail lies in what counts as income and as expense. For a Singapore residential unit, the working version is:
- Start with gross rent for the year (twelve months of the contracted rent).
- Deduct a vacancy allowance, for the months the unit is empty between tenants.
- Deduct operating costs: maintenance or management corporation fees, property tax, fire insurance, repairs, agent commission and any management fee.
- The result is net operating income, the figure before financing.
- Deduct the actual mortgage instalment, interest and principal together.
- Divide by twelve for the monthly cash flow figure.
Two points avoid common errors. First, principal is not an operating expense, but it is real cash leaving the account each month, so cash flow includes it while a profit calculation does not. Second, the instalment should be counted only for the loan term, and principal should not be deducted a second time when total profit is later computed alongside sale proceeds.
A property can therefore show negative cash flow while still building equity, because part of every instalment reduces the loan. The distinction matters when reading the result: a negative figure caused mostly by principal repayment is a liquidity matter, whereas a negative figure that persists even before principal is counted points to pricing.
Income lines to include
Rent is not the only inflow that IRAS treats as rental income. According to IRAS guidance on income from property rented out, rental income covers the full rent of the premises along with related receipts such as maintenance payments from the tenant, rent of furniture and fittings, forfeited rental deposits, subletting income and insurance recoveries.
For a cash flow model, the practical entries are:
- Contracted monthly rent multiplied by the number of occupied months.
- Any separately charged furniture rental.
- A forfeited deposit, which is occasional and should not be forecast.
The vacancy allowance deserves a deliberate figure. Market-wide vacancy is a useful reference point, and haio's analysis of the Singapore rental market tracks how vacancy conditions shift bargaining power between landlords and tenants. A unit in a district with a higher vacancy rate warrants a longer assumed gap between leases than one in a tight sub-market.
Expense lines and how IRAS treats them
The same IRAS page distinguishes between allowable and non-allowable expenses, which is a useful checklist for a cash flow model as well as for a tax return.
Allowable deductions for tax purposes include:
- Mortgage interest (not principal).
- Property tax incurred during the rental period.
- Fire insurance premiums.
- Repairs that restore the property to its original state.
- Maintenance costs such as painting, pest control and monthly charges paid to the management corporation.
- Agent commission and advertising, from Year of Assessment (YA) 2022.
- Management fees, replacement of furnishings, and internet or utility charges paid on the tenant's behalf and not reimbursed.
Non-allowable items include:
- Principal loan repayments.
- Late payment charges and property tax penalties.
- Renovation and alteration costs.
- Depreciation of furnishings.
- Expenses on properties that do not generate rental income.
From YA 2022, costs incurred during vacancy between leases (repairs, insurance, maintenance and property tax) can also be deducted where reasonable efforts were made to find a new tenant, according to the same IRAS page.
A cash flow model differs from a tax computation in one respect. Cash flow records money that leaves the account, so principal repayment and renovation cash-outs appear in it even though IRAS does not allow them as deductions. Keeping the two views separate prevents the mistake of treating a tax deduction as a cash saving.
Property tax: the largest recurring cost for many investors
Residential property that is not owner-occupied is taxed at progressive rates on its Annual Value (AV). Gov.sg's property tax explainer lists the non-owner-occupied rates effective 1 January 2024, and states that AV is based on market rentals of similar properties and reviewed annually by IRAS.
| Annual Value band | Non-owner-occupied rate |
|---|---|
| First S$30,000 | 12% |
| Next S$15,000 (S$30,001 to S$45,000) | 20% |
| Next S$15,000 (S$45,001 to S$60,000) | 28% |
| Above S$60,000 | 36% |
Media reporting on the 2026 budget cycle indicates that no new property tax increases were announced for 2026, with the current rates having been introduced in two steps across 2023 and 2024.
Because tax is computed on AV and AV tracks market rent, higher-rent units are taxed on a larger base and at higher marginal rates. A model that uses a flat percentage of rent understates the cost of larger or prime-location units. Rebates that apply to owner-occupied homes are covered in haio's property tax guide, though the investor should confirm which rates apply to a tenanted unit.
A unit with an AV of S$42,000, for example, pays 12% on the first S$30,000 (S$3,600) and 20% on the remaining S$12,000 (S$2,400), a total of S$6,000 a year, or S$500 a month.
Deemed 15% or actual expenses: the tax side
Cash flow before tax is the usual analytical figure, but the tax treatment affects what an owner keeps. IRAS pre-fills a deemed rental expense of 15% of gross rent in the online tax form for residential property, and mortgage interest can be claimed in addition. Alternatively, an owner may claim actual expenses.
The IRAS e-Tax Guide on simplified claims of rental expenses (third edition, published 30 January 2026) sets out the conditions. The deemed option applies from YA 2016, must be applied consistently across all tenanted residential properties in the same YA, cannot be claimed if no deductible expense (excluding interest) was incurred, and is unavailable where income is earned through a partnership or trust.
The IRAS worked example uses gross rent of S$5,000 a month (S$60,000 a year), mortgage interest of S$12,000 and other deductible expenses of S$7,500. Under the deemed method, net rent is S$60,000 less S$12,000 less S$9,000 (15% of S$60,000), which equals S$39,000. Actual expenses of S$7,500 would be lower than the S$9,000 deemed figure, so in that example the deemed method produces the lower taxable amount. An owner whose real costs exceed 15% of gross rent would compare the two.
The choice changes the tax line only. It does not change the cash that left the account, so the cash flow model should still use actual costs.
A worked example with illustrative figures
The following example is a hypothetical illustration, not a quoted listing. It shows how the lines combine.
| Line | Annual amount |
|---|---|
| Gross rent (S$4,000 a month) | S$48,000 |
| Vacancy allowance (half a month) | -S$2,000 |
| Non-owner-occupied property tax (AV S$42,000) | -S$6,000 |
| Maintenance fees (S$350 a month) | -S$4,200 |
| Insurance and repairs | -S$1,500 |
| Net operating income | S$34,300 |
| Mortgage instalment (S$3,300 a month) | -S$39,600 |
| Cash flow after financing | -S$5,300 |
The annual shortfall of S$5,300 equates to about S$442 a month. Now assume that S$15,000 of the year's instalments is interest and S$24,600 is principal. Net operating income less interest alone is S$19,300, which is positive. The owner is therefore paying down S$24,600 of loan each year out of pocket, and the property is, in the words of one landlord-maths framing, financing an asset rather than being subsidised by one. If rent could not cover interest, maintenance and tax, the problem would be pricing, and loan restructuring would not resolve it.
The example excludes income tax, agent commission and any CPF-related effects, all of which a full model should include.
Cash flow, yield and cash-on-cash return
Three measures are often conflated:
- Gross yield is annual rent divided by purchase price, with no costs deducted.
- Net yield is annual rent less running costs (maintenance, non-owner-occupied property tax, vacancy, insurance, repairs and leasing), divided by price. It typically sits one to two percentage points below gross yield. haio's guide to Singapore rental yields explains the conversion from yield into cash flow.
- Cash-on-cash return is annual net cash flow after the mortgage, divided by the cash actually invested (downpayment, Buyer's Stamp Duty, Additional Buyer's Stamp Duty where applicable, renovation and legal fees).
Yield describes the asset, whereas cash-on-cash return describes the investor's position, because it depends on the loan. Two buyers of the same unit can post different cash-on-cash figures because of different downpayments. Comparisons are meaningful only when they use the same loan-to-value assumption: a purchase with a small downpayment appears to give a higher return than the same unit bought with a larger one, but the risk profile differs. haio's LTV guide sets out the limits that apply, and the BSD schedule feeds into the cash invested figure.
An exit-side item is also frequently omitted. Where CPF savings were used for the purchase, accrued interest at 2.5% a year is refundable on sale, and leaving it out overstates long-term returns. haio's CPF accrued interest guide models the refund, and the CPF housing usage guide covers the 120% cap.
What counts as good cash flow
No official benchmark exists for a good monthly cash flow in Singapore, and figures quoted for other markets do not transfer, because purchase prices are high relative to rents. A more useful frame has three parts:
- Break-even after interest. Rent less interest, maintenance and tax should be positive. If it is not, the purchase price or the rent assumption needs to be revisited.
- Funding capacity. The monthly shortfall, if any, should be one the household can carry through a vacancy period and a rate increase without forced sale.
- Return against alternatives. Net cash flow should be set against the capital committed. A modest monthly surplus on a large cash outlay yields a low cash-on-cash percentage, and that figure can be compared with the return on safer instruments.
Some investors accept a negative carry deliberately, on the expectation of capital appreciation or of principal paydown. That is a legitimate strategy, but it is a different proposition from a cash-flow-positive property and should be labelled as such in the model.
Testing whether cash flow will stay positive
A single-year figure says little about durability. Five checks are worth running before committing.
Rate sensitivity. Bank assessments of loan eligibility under the Total Debt Servicing Ratio framework use a stressed interest rate rather than the market rate, so affordability at purchase is already tested at a higher figure. For the cash flow model, rerun the instalment at two or three higher rates and see whether the surplus survives. haio's 15-minute underwriting checklist sets out a sequence for this.
Vacancy stress. Model two or three months empty rather than half a month. Property tax and maintenance charges continue during vacancy, and only some costs are deductible for tax purposes.
Rent reality. Use transacted or contracted rents for comparable units, not asking rents. An overestimated rent at purchase is a pricing problem that financing cannot correct.
Tenure and age. Lease length affects both resale value and financing conditions, as discussed in haio's freehold versus leasehold comparison.
Buy-versus-rent logic. Comparing the cost of owning with the cost of renting an equivalent unit helps expose whether the purchase relies on appreciation alone. haio's break-even calculator article works through that comparison.
Our perspective
Most cash flow projections for Singapore go wrong at the data stage rather than the arithmetic stage. Rents are taken from asking prices, the purchase price is taken from a listing instead of recent transactions, and the tax and loan lines are estimated from memory.
We built haio to put the transaction record, valuation, market analysis and affordability checks in one place, so that the inputs to a cash flow model come from the same data set. Our view is that a landlord who can see what comparable units actually transacted and rented for is less exposed to the pricing problem, which no later restructuring of the loan can resolve.
We also hold that affordability should be checked before the property search, not after. A personalised affordability check and current mortgage rates show how much of a shortfall, if any, a household can carry. For investors and agents presenting figures to clients, an unbiased data trail makes the projection easier to explain and to defend.
HAIO
Running the numbers on haio
The inputs of a cash flow model, namely purchase price, comparable transactions, financing capacity and market trend, are available in haio's tools. Property Analysis covers market analysis for a given property, the Affordability tool provides a personalised check, and individual condominium pages such as Bartley Residences show price history and transactions. Further analytics, valuation reports and Master Plan tools are part of haio+, priced at S$49 per month or S$499 per year, with a Basic tier also listed on that page.
FAQ
Is mortgage principal an expense when calculating rental cash flow?
Principal is cash leaving the account, so it is included when calculating cash flow. It is not an expense for tax or profit purposes, because it reduces the loan and builds equity. IRAS does not allow principal repayments as a rental deduction, though mortgage interest is deductible.
Can I claim the 15% deemed expense and mortgage interest together?
Yes, for residential property. IRAS pre-fills a deemed expense of 15% of gross rent, and interest on the loan taken to buy the tenanted property can be claimed on top. The option must be applied consistently to all tenanted residential properties in the same Year of Assessment, as set out in the IRAS e-Tax Guide.
What property tax rates apply to a rented-out home?
A home that is not owner-occupied is taxed at 12% on the first S$30,000 of Annual Value, 20% on the next S$15,000, 28% on the next S$15,000 and 36% above S$60,000, according to gov.sg. These are the rates effective from 1 January 2024.
Is negative cash flow always a bad sign?
Not necessarily, but its cause matters. When the shortfall comes mainly from principal repayment, the fix lies in loan structure, such as rate, tenure or amount borrowed. When rent does not cover interest, maintenance and tax, the issue is the price paid or the rent assumed, and the purchase case needs rethinking.
Does vacancy affect the tax deduction?
It can. From YA 2022, repair, insurance, maintenance and property tax costs during vacancy between leases may be deducted, provided reasonable efforts were made to find a new tenant, according to IRAS.
Sources
- IRAS: Income from property rented out
- IRAS e-Tax Guide: Simplification of claim of rental expenses for individuals
- Gov.sg: Property tax on residential property
- The Online Citizen: Property tax rates for investment properties, no new hikes announced