On 18 February 2022, the government has announced some changes to the tax rate. For now, we are going to dive into the property taxes first.
While one could quickly assume that any steps taken to tax on properties are deemed as part of the cooling measures, this is not the case. Instead, the Government has taken steps to ensure that the tax changes will be a gradual one.
The changes in the property tax will take effect in 2 stages, starting from 2023. The changes to the rate only affect residential properties. As of now, the commercial properties tax rate remains at 10%.
Taxes on residential properties only
The property tax for owner-occupied residential properties will go up for the portion of Annual Value (AV) in excess of S$30,000: from 4-16 per cent today, to 5-23 per cent from 2023 and 6-32 per cent from 2024.
The property tax rate for non-owner-occupied residential properties will be hiked across the board: from 10-20 per cent presently, to 11-27 per cent from Jan 1, 2023, and 12-36 per cent from Jan 1, 2024.
What is Annual Value
The AV of buildings is the estimated gross annual rent of the property if it were to be rented out, excluding furniture, furnishings and maintenance fees. It is determined based on estimated market rentals of similar or comparable properties and not on the actual rental income received.
How to check your property Annual Value
On your mobile, Log in to your SingPass > IRAS MyTax Portal > Property > Property Dashboard
Alternatively, you can click this link to be directed to IRAS webpage.
Tax rate for owner-occupied rate
Properties of AV $30,000 or lesser are not affected as long as the owners are residing in the property. Hence, this does not affect most HDB homeowners and the homeowners outside the core central region (OCR) area.
The ones mainly affected by the new tax rates are owners of the more expensive properties with higher AVs. These residential properties are usually high-end properties in the Core Central Region owned by the wealthy.
Tax rate for non-owner-occupied rate
Landlords will be faced with higher taxes from next year onwards.
At the first $30,000 AV, the tax rate will increase by 1% in 2023 and 2% in 2024.
However, above the $30,000 annual value, the rate increase gets higher.
Before this, a property with an annual value above $90,000 is be taxed the highest. However, in the next year, any properties above $60,000 would be taxed the highest.
Most of the homeowners are not affected by the increase in the tax as long as their AV remains below $30,000.
For landlords, the additional increase in tax will most likely be passed to the tenants.
In my opinion, this will not dampen the demand for residential property. On the flip side, owners who own multiple residential properties might want to change their portfolio to invest in commercial real estate. At the moment, there is no change in the commercial property tax rate, which remains at 10%.