If you are a property owner, you receive your Singapore property tax bill every year. Whether you are a property homeowner or an investor in Singapore, you are required to pay your property tax by the 31st of January every year.
Singapore property prices have gone up in the past 2 years, and so has the property tax. Most Singaporeans have to pay a higher property tax in 2023 and even more in 2024.
Do you know that despite owning the same house, you were paying different property taxes every year? Do you know how your property tax is determined? In this article, I will explain how the property tax system works and what are the recent changes so you can do the necessary financial and investment planning.
What is property tax?
Property tax is a wealth tax. As this is a progressive wealth tax that is levied on those who can afford it. It helps to diversify the sources of government tax revenue. It is a tax levied on all property owners in Singapore whether your property is
- tenanted out, or
- left vacant.
In the past, you may have paid income tax for the rental income derived from the leasing of your property. But property tax is a separate tax. In words, if you are renting out your property, you are required to pay both income tax and property tax.
How is Singapore property tax calculated?
As long as you are listed as the property’s “owner”, you have to pay property tax. There are two types of properties in Singapore
- Residential properties such as HDB flats, condominiums, apartments, and bungalows.
- Non-residential properties such as commercial and industrial buildings
In Singapore, property tax rates on owner-occupied and non-owner-occupied residential properties are applied on a progressive scale, and all other properties are taxed at 10% of the Annual Value (AV).
Today I will only talk about the residential property tax.
In a nutshell, your annual property tax = Annual value x Tax rate
Annual value is the estimated yearly rental which your property can fetch if it were rented out. It excludes furniture, furnishings & maintenance fees. The Inland Revenue Authority of Singapore (IRAS) determines this each year based on the estimated market rentals of similar or comparable properties.
All residential properties are taxed at progressive property tax rates.
- You pay a lower tax rate if your property is owner-occupied
- You pay a higher tax rate if your property is non-owner occupied.
Progressive property tax rates were revised in 2014. You pay less property tax for an owner-occupied property but even higher tax if you rent out your property.
Owner-occupied residential properties refer to condominiums, HDB flats or other residential properties where the owner lives (“occupies”). The progressive property tax rates for the owner-occupied property are shown below with effect from Jan 1, 2023.
So once you understand the concept of Annual Value and Tax Rate, you can easily calculate property tax by yourself.
For example, if the annual value of your residential property is $36,000, your property tax is $1,120. This is how it is calculated:
|Annual Value ($)||Tax Rate||Property Tax Payable|
|First 30,000||–||= $880|
|Next 6,000||X 5%||= $300|
|Total Property Tax Payable||= $1,180|
On the flip side, non-owner occupied residential properties refer to condominiums, HDB flats or other residential properties that the owner does not live in (“occupy”).
Property tax rates for non-owner-occupier residential properties are as below:
For example, If the annual value of your residential property is $36,000 but it is rented out, your property tax is $4,260. This is how it is calculated:
|Annual Value ($)||Property Tax Rate||Property Tax Payable|
|Total Tax Payable||$4,260|
You need to pay much higher property tax if you rent out your property
Many Singaporeans aspire to own two properties. One they plan to stay in and one is for rental income. But you should know it is extremely costly to invest in property in Singapore for income.
Not only do you have to pay income tax for the collected rental, but you also have to pay hefty property tax because it is non-owner occupied. The table above shows that the minimum tax is 11% of your Annual Value (estimated rental income).
If you do a simple calculation, a condominium with a $36,000 annual value will cost you
- $1,180 property tax if you live in it
- $4,260 property tax if you rent it out
The property tax rates will be revised upwards again
The property tax will be even higher next year. With effect on 1 Jan 2024, the new property tax rates will be as below:
And you can see that the increment is not marginal but substantial for properties with higher value.
For properties with annual values of more than $30,000, the tax rate increment between $30,000 to the next tier is:
- Owner occupied: from 4% to 6%
- Non-Owner Occupied: from 16% to 20%
One-off property tax rebates
With increased global inflation and rising living costs, the Government will provide a one-time rebate equal to 60% of the 2023 Property Tax Bill, up to $60, to mitigate the increase in property tax payable. All owner-occupied residential properties will receive the rebate. The rebate will be automatically offset against any property tax payable in 2023.
All one- and two-room HDB owner-occupiers will continue to pay no property tax in 2023 as their revised AVs remain below $8,000. The revised property tax bills of other owner-occupied flat types are shown below:
Pay property tax on time to avoid penalties
You have to pay your property tax by 31 January to avoid a 5% penalty. You can pay property tax via:
- GIRO – To sign up / access more information on GIRO, click here
- PayNow – You can refer to the step-by-step guide on how to make payments in myTax Portal.
- Singpost / SAM
- Internet Banking Billing Payment
Thoughts about the property tax hike
As part of IRAS’s annual review, the increase happened as a reflection of the rise in market rents. Since the last revision of annual values on Jan 1, 2022, market rents of HDB flats and private residential properties have risen by more than 20%. This is largely due to the strong demand for properties in land-scarce Singapore.
The 2-step increase in property tax (and the annual value of properties) is expected to largely impact higher-end properties with annual values exceeding $60,000. With this increase, investors and non-occupier homeowners who are benefiting from their rental gains will be negatively impacted.
Looking at the math, it is estimated that
- Properties with current annual values of $30,000 (prior to the upward revision of annual values) will see property taxes increase by $1,260 or 42% in 2023.
- For properties with current annual values of $60,000, property taxes are expected to increase by $5,190, or 75.2% in 2023.
- For properties with current annual values of $90,000, property taxes are estimated to increase by $9,810 or 81.8% in 2023.
It is obvious that the government is not happy to see Singapore property prices going through the roof. The new round of property cooling measures in 2022 set the tone.
In my next article, I will talk about my outlook on the Singapore property market in 2023.
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