Hi Sifus,

I would like to buy a second-hand house from a potential house owner, the house is now occupied by a tenant and pay monthly rental. My question is when the rental income belongs to the new owner? At the date of stamped Sales and Purchase Agreement or memorandum of transfer or the date when the name on the title transfer to the new owner?

Thanks sifus

This post has been edited by Nepo: Oct 19 2017, 08:36 AM

Date when your bank release full payment and handover the master keys to you.

That means the previous owner will hand over the keys to me when he receives the full payment.

How about the rental income recognition by the Inland Revenue Board in income tax law?

Will IRB taxes me for the period of rental income from S&P Agreement to the full payment release by the bank(if no clause states that when the rental income should belong to the new owner?

Thank you.

From legal perspective, you'll need to sign new tenancy agreement with the existing tenant as the previous agreement was with previous owner, IRB can't tax you based on the old agreement as you did not sign it

IRB will tax you based your borong BE submission form. They will refer to your rental agreement with tenant for the starting date of rent. Be sure to submit your new rental agreement to LHDN for stamping to make it legal.

Thank you sifus.

it'll be the date you get legal possession of the property (which is usually defined as the date you pay the balance purchase price to the lawyer)

you can sign a deed of assignment of tenancy between you, the tenant and the previous owner to 'assign' the rights of the tenancy agreement to you.