How to Make Money by Renting Out a Part of Your Home
Though every Singaporean would be aware that they can make money by renting out their spare rooms in Singapore, there are only a few who seriously consider a few other ways to make extra money off their living spaces. A house can practically pay for itself if we implement the right strategies. It can also bring more income than the mortgage repayments costs. This article will help you find a few possibilities for you to earn extra income before you start hunting for the next tenant.
Clever Ways to Make Money By Renting Out
Consider Renting a Room Out as Storage Space
Although we know it is possible to make money by renting out the spare rooms at our spaces, we shy away from becoming landlords. Renting out extra rooms as storage spaces instead of giving them to a person is considered because of the same reason. You can outfit the spare room at your house with proper storage racks and lockers as it can cater to people who have bulky goods to store. Bulky items would need a lot of storage space. For instance, painters might be looking for a room to keep their canvases. There will also be others who might want to store their extra clothes and appliances while waiting to move into their new living space.
However, there are few legal considerations involved in this. You will have to make sure that the renters understand that there is a risk in keeping their items and that you are not responsible for them. You will have to draw up a contract for you with a one-time cost. You must also verify the credentials of the person or group whose belongings are stored. Avoid accepting to store items of high value such as gold, jewellery, and other luxury goods.
Think of Splitting the Rental Unit
You can consider splitting the rental unit if you have a whole one to rent out. For instance, you can divide a condo unit of 1400 square feet between three tenants rather than one single-family. You need to get approval if you are planning to hack the walls down for HDB flats. The best way is to put up partitions to divide the area between tenants. Make sure that your plans are acceptable to the HDB before you take any action. Check if you meet your requirements including the number of tenants allowed. The main advantage of this is that you will only have to experience a low risk of vacancies.
Increase Your Rental Income with Tax Deductions
Landlords in Singapore have many possibilities for tax deductions. You can claim deductions in tax on the interest payment of your mortgage. You can even claim deductions for the money spent on the maintenance of your home. Make sure to save the receipts of the maintenance you did during the rental period to claim the tax with IRAS. Note that you cannot use the repairs to improve the unit, but restore its normal condition. For instance, you can claim a tax deduction if you replace damaged vinyl flooring with the same material and not a high-grade Italian marble.
Consider Lease-Buyback Scheme for Retirement Income
Those who are on the lookout for having more retirement income can consider the lease-buyback scheme. It allows Singaporeans aged 65 or older to sell some of the unused portions of the lease on their flats, back to the government. This scheme can supplement the CPF retirement funds by $10,000 to $20,000 with very little immediate impact on your life. But make sure to check if you are really in need of the scheme. You wouldn’t necessarily need to surrender your remaining lease if your CPF funds are already substantial.
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