The new year is around the corner. With all the property cooling measures in the past years, many expect that the property market will remain quiet next year.
If you are a property owner, you have to pay some attention to property as there will be some significant changes next year.
What is Property Tax
Property Tax is a tax on the property and is payable by the owner whether or not the property is owner-occupied, let-out or left vacant. It is different from Income Tax which applies when owners rent out their property.
Property Tax is calculated as Annual Value (AV) * Tax Rate.
You can find out more about how to calculate property tax in this post.
Lower property tax from 2014
The good news is that most owner-occupied homes will pay lower property tax bills next year. This is due to the Progressive Property Tax Rates announced in Budget 2013.
All owner-occupied HDB flats and three-quarters of owner-occupied private homes will pay less.
- 95% of 975,200 owner-occupied homes will see lower property tax bills
- Taking into account non-owner-occupied homes, 80%of all 1,150,400 homes will pay lower property tax in 2014
Introduction of Progressive Property Tax Rates
The new Progressive Property Tax Rates for owner-occupied residential properties will take effect on 1 Jan 2014.
With the new property tax structure, the Annual Value (AV) exemption threshold for which no tax applies has been raised from $6,000 to $8,000. This means that property owners who live in their homes will not have to pay property tax on the first $8,000 of the AVs of their properties.
The new property tax structure also increases the progressivity of the property tax structure by taxing properties with higher AVs more.
How is Annual Value (AV) determined
AV and Property Tax for Owner-Occupied HDB Flats
The Inland Revenue Authority of Singapore (IRAS) reviews the AVs of all properties annually. The AV of a property is based on the estimated annual market rent of the property if it was to be let out, and is used as a basis to compute the property tax payable.
The market rents of three- to five-room HDB flats have increased by about 3% since the last AV revision on 1 Jan 2013. The AVs of these three- to five-room HDB flats will be revised from 1 Jan 2014. There will be no change to the AVs of the rest of the HDB flats as their market rents have remained largely the same since the last AV revision.
Taking into account their AVs and the new property tax rates, all one- and two-room HDB owner-occupiers will continue to pay no property tax, as the AVs of these flats remain below $8,000. The rest of HDB owner-occupiers will enjoy property tax savings ranging from $28 to $40 in 2014.
The property tax payable for HDB owner-occupied flats in 2014 are as follows:
|2013 Property Tax Payable|
$44 – 92
$128 – 176
$164 – 212
$188 – 236
|2014 Property Tax Payable|
$13.60 – 61.60
$100 – 148
$136 – 184
$148 – 196
|Tax Savings in 2014|
AV and Property Tax for Owner-Occupied Private Residential Property
The market rents and hence AVs of 70% of private residential properties over the past year have remained largely the same since the last AV revision, with the remaining 30% seeing an increase in AV.
Taking into account their AVs and the new property tax structure, 74% of private owner-occupiers will also pay less tax after applying the new tax rates on their 2014 AVs.
Increase in Property Tax for Non-Owner-Occupied Residential Properties
Under the new property tax structure, the property tax rates for non-owner-occupied residential properties with AV above $30,000 will be increased from 1 Jan 2014, based on a progressive schedule
With this change, 74%of non-owner-occupied private residential properties and HDB flats will have higher property taxes after applying the new tax rates on their 2014 AVs.
Property Tax Payment is due on 31 Jan
You will receive your property tax notices and bills by the end of this year. You have to pay your property tax by 31 Jan 2014, or you will be levied a 5% penalty.
Do you have any question about property tax? Simply leave your comment below and I will help answer all.