Q. I OWN five units of properties with three units in joint names with my spouse and the others solely owned by me. My question is, every month my spouse will collect the rental on my behalf, and she also troubleshoots if there are problems with the houses. Since she uses her own transport, makes telephone calls, pays parking and toll fees, goes to the bank etc. can I pay her a salary for her help? My spouse is a housewife – Sam
A. THE tax law allows you to claim a deduction for expenses that you have expended to generate the rental income from your properties. These may include quit rent, assessment, insurance, repairs and maintenance, housing loan interest taken on the properties and rent collection fee paid to an estate agent.
As your wife is a “related party” and not a registered real estate agent, there could be more scrutiny by the IRB on the claim for the fee paid to her. For example, whether the fee payment is at market rate, whether the fee is commensurate with the services provided or is it excessive, etc. If a fee is paid to your wife, she will have to report the income in her tax return.
A. THE tax law allows you to claim a deduction for expenses that you have expended to generate the rental income from your properties. These may include quit rent, assessment, insurance, repairs and maintenance, housing loan interest taken on the properties and rent collection fee paid to an estate agent.
As your wife is a “related party” and not a registered real estate agent, there could be more scrutiny by the IRB on the claim for the fee paid to her. For example, whether the fee payment is at market rate, whether the fee is commensurate with the services provided or is it excessive, etc. If a fee is paid to your wife, she will have to report the income in her tax return.
2) My wife and I jointly own two commercial properties which are rented out. My wife is a full-time housewife and has no income. I am at the maximum tax rate currently and on combined assessment filing. Can my wife take up the full rental income or at least 50% of the income and file for separate assessment?
If only 50% of rental income is allowed, do we need to split the property expenses like quit rent, insurance and assessment 50/50 also? – William Tan
If only 50% of rental income is allowed, do we need to split the property expenses like quit rent, insurance and assessment 50/50 also? – William Tan
Since your two properties are jointly owned, each of you would declare half the rental income equally in your respective tax return. Any expenses expended to generate the rental income from the jointly-owned properties (for example, property quit rent and assessment, insurance and repair and maintenance) must also be split equally to be deducted against the rental income.
Your wife may elect for a separate assessment to report her half share of the net rental against her personal tax relief.
Your wife may elect for a separate assessment to report her half share of the net rental against her personal tax relief.
Checklist to Ensure You Make Maximum Claims Allowed
To make sure that you have not missed out any claims which you are entitled to, please go through the following check list before submitting your Borang BE 2008.1. Choose Separate Assessment if your spouse has income of RM3,000 or more in a year (as a general rule of thumb)
2. Profession subscriptions
Ensure subscriptions paid to professional bodies related to your job are deducted from Employment Income before filling up item C1. (Eg. Accountants, Engineers, Lawyers, Architects, Doctors)
3. Dividends
Ensure that all dividends received are included. As dividends are taxed at source at 26%, make sure that you declare them in item C2 and claim Section 110 Set off in item E10.
Two exceptions here :-
i) If the dividend received are ‘single tier dividends’, then there’s no need to declare.
ii) If your final tax rate is 27%, then you may have lost your dividend vouchers and forgot all about them. You save the difference of 1%.
4. Interests from bank accounts (Savings, fixed deposits, etc)
These would have been either taxed at source or tax- exempt. No need to declare.
5. Donations or Gifts to the government
As these are not common, I will not discuss them here. Go through the items from C8 – C15.
6. Parent’s Medical Expenses Paid
Keep receipts – Maximum RM5,000
7. Purchase of Equipment for Disabled parents, spouse, children or self
Maximum – RM5,000
8. Disabled persons – Self
Additional RM6,000 relief
9. Own Educational Course Fees Paid
Maximum – RM5,000
10. Medical Expenses for Serious Deceases – Self, spouse or children
Maximum RM5,000
11. Fees paid for Full Medical Examination
Maximum RM500
12. Purchase of books, magazines & journals
Maximum RM1,000 (School books, cookery books, etc. It does not matter who they are for)
13. Purchase of personal computer
Maximum RM3,000 if you have not made a claim in 2007 & 2006
14. Net contribution to SSPN
Maximum RM3,000
15. Purchase of sports equipment
Maximum RM300
16. Husband/Wife Relief
If not assessed separately, RM3,000
17. Disabled Husband/Wife
Additional RM3,500
18. Children Relief
Below 18 years old – RM1,000 each
Above 18 years old and studying in tertiary level – RM4,000 each
Disabled children – Additional RM4,000 on top of the above
19. Life Insurance premium and EPF paid (Self and spouse)
Total maximum RM6,000. If separate assessment, husband and wife claim in own form.
20. Medical and Education Insurance (Self, spouse or children)
Maximum RM3,000
All the claims which are not specific to any person, eg. sports equipment, books, SSPN, children, etc. can be claimed by either husband or wife. Therefore, put those claims on the person who is in a higher tax bracket.
21. Tax Rebate
If your Chargeable Income in Item E3 is RM35,000 or less, you are entitled to
1 comments:
i wish i will concern on my tax soon
huhu