5. If the tenant fails to pay rent, can I report the uncollected rent and claim deductions in Property Tax?
You can claim a deduction for the amount of rent remaining unpaid only when the rent has become irrecoverable (e.g. your tenant has gone bankrupt and does not have any assets from which you can recover your outstanding rent). If the tenant only defers the payment of monthly rent and has not moved out, the uncollected rent is unlikely to be treated as “irrecoverable rent”. You are advised to check with the Inland Revenue Department or other legal/accounting professionals before claiming the rent as irrecoverable on your tax return.
If you have used the rental deposit to set-off part of the irrecoverable rent, only the balance un-recovered could be claimed as irrecoverable rent.
Irrecoverable rent can be excluded from the assessable value in the year in which it became irrecoverable. Any amount subsequently recovered is assessable to tax as income in the year of recovery.