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SG IRAS: 95% of owner-occupied homes to pay lower property tax

Property Here - Wednesday, November 27, 2013

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The majority of owner-occupied homes will pay lower property tax next year, the Inland Revenue Authority of Singapore (IRAS) revealed.

Under the new Progressive Property Tax Rates announced in Budget 2013, all owner-occupied HDB flats and three quarters of owner-occupied private homes (or 95 percent of owner-occupied homes) will pay lower property tax in 2014. 

Taking into account homes that are not occupied by owners, 80 percent of all residential properties in Singapore will be paying less property tax next year.

Beginning 1 January 2014, the Annual Value (AV) exemption threshold for which no tax applies will be raised to S$8,000 from S$6,000. This implies that owner-occupiers will be exempted from paying for the first S$8,000 of their property's AV.

According to IRAS, “the new property tax structure also raises the progressivity of the property tax structure by taxing properties with higher AVs more”. 

Reviewed by IRAS annually, a property's AV is based on the estimated annual market rent of the property if it was to be let out. Thereafter, it is used as a basis to compute the property tax payable.

The AV for three- to five-room HDB flats will be revised next year since the market rents for these flats increased by around three percent since the last AV revision in January 2013.

The AV of the rest of the HDB flats will not be changed as their market rents have remained largely the same.

Consequently, owner-occupiers of all one- and two-room HDBs will not pay any property tax, while the rest of the HDB owner-occupiers will enjoy property tax savings ranging from S$28 to S$40 in 2014.

Meanwhile, the market rents and hence AV of 70 percent of private homes over the past year have remained largely unchanged since the last AV revision, while the remaining 30 percent witnessed an increase in AV.

With the new property tax structure, 74 percent of private owner-occupiers will pay lower tax in 2014.

Based on a progressive schedule, the property tax rates for non-owner-occupied homes with AV above S$30,000 will be increased from 1 January.

With this, 74 percent of non-owner-occupied private homes and HDB flats will see higher property taxes considering the new tax rates on their 2014 AV.

IRAS said that property owners will receive a copy of their tax notices and bills by year-end. It also reminded them to pay their property tax by 31 January next year.