SINGAPORE — Nine in 10 homeowners here will pay lower property tax next year, as annual values (AVs) derived from estimated rents of both public and private housing fell, the Inland Revenue Authority of Singapore (IRAS) said in a statement issued today (Nov 30).
IRAS said all Housing and Development Board (HDB) flat owners will pay lower or no property tax next year, while eight in 10 private homeowners (259,000) will pay lower property tax when the revised AVs take effect from Jan 1, 2016. This applies to owners of executive condo. Existing HDB EC in the market include The Terrace EC, Brownstone EC , Signature At Yishun EC while upcoming ones include Parc Life EC and Wandervale EC.
IRAS did not reveal the extent of the reduction in AVs, but said it will result in tax savings in the range of 9 per cent to 24 per cent for HDB flat owners.
In particular, 28,200 owners residing in their HDB three-room flats will not have to pay any property tax, along with all one- and two-room flat owners who will continue to be exempted from property tax payment. Taxes will also be lowered for four- (380,000), five- (225,000), and executive flat (65,000) owner-occupiers.
IRAS added: “Of the private residential properties with reduced annual values, more than 80 per cent will see tax savings of between 3 per cent and 20 per cent.” IRAS could not provide, by press time, the number of private homes that saw their AVs reduced.
AVs of properties are reviewed annually to ensure that they reflect prevailing market rentals. Property tax is a tax on property ownership and it is payable on all properties regardless of whether it is rented out, owner-occupied or left vacant.
The reduction in AVs for both public and private housing was in line with a weakening rental market. Latest flash data by SRX Property showed that HDB rents have fallen 1.2 per cent in three months as of October, while that of non-landed private homes have declined 4.5 per cent in nine months.
Property analysts said higher supply of homes available for rent and tighter immigration policies will continue to dampen rental prospects. “Private rents are being pushed down by supply and that will keep HDB rents depressed also although the HDB rental market looks like it is more or less bottoming out,” said Mr Eugene Lim, key executive officer of ERA.
Home-buying sentiment is also unlikely be lifted by the fall in property tax, analysts said, pointing out that factors such as price, location and potential capital appreciation would be bigger considerations. The various property curbs, which the Government has indicated it is unlikely to revise anytime soon, will continue to keep buyers at the sidelines as well.
“I don’t think that is a major consideration when people buy properties. Property tax is dependent on rental income, or potential rental income. So when rents are down, you’re taxed less but property prices could be going up — the two trends could go different ways. The tax is also rather minimal, in the grand scheme of things,” said Mr Colin Tan, director of research and consultancy at Suntec Real Estate Consultants.