Nov 27, 2013

    Lower property tax for owner-occupied properties

    GOOD news for homeowners: You are likely to pay less to the taxman next year.

    All owner-occupied Housing Board flats and and three quarters of owner-occupied private homes will pay lower property tax next year, the Inland Revenue Authority of Singapore (Iras) said yesterday.

    But people who own homes with higher annual values, and do not live in them, will be forking out more.

    Iras said yesterday that 95 per cent of all homes lived in by their owners will be taxed less, under new progressive property-tax rates which kick in from Jan 1.

    If one includes non-owner-occupied homes, that figure will drop to 80 per cent of all homes here.

    Announced in February as part of this year's Budget, the new rates include a higher threshold for annual value exemption. It 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 annual values of their properties.

    Annual value is based on a piece of property's estimated annual market rent, and is used as a basis to determine how much tax the owner must pay.

    According to Iras' press release, the market rents of three- to five-room HDB flats have increased by about 3 per cent since the last annual-value revision in January this year. Thus, the annual values of these flats will be revised from Jan 1 next year, while the annual values of the rest of the HDB flats will stay the same.

    Under the new rates, a three-room HDB flat will enjoy savings of $30.40 a year, while four- and five-room flats will save $28, and executive flats - which do not include executive condominiums, as they are considered private homes - will score savings of $40.

    All one- and two-room HDB owner-occupied homes will not be subjected to tax as their annual values remain below $8,000.

    But homes not occupied by their owners which have annual values of above $30,000 will be taxed more.

    Iras says about 74 per cent of such non-owner-occupied homes will see higher taxes.

    Madam Marie Tan, 57, who lives in a four-room flat in Hougang, said the new rates are a step in the right direction.

    "Those who can afford to rent out their properties should have no problem paying a bit more tax... The money I save can be spent on groceries or other daily necessities," said Madam Tan, who is unemployed.