Property Tax In Singapore
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Are you struggling to calculate property taxes for Condos and HDB flats in Singapore? Follow this article to learn about Annual Value, property tax, and more.
Property tax is one of the essential payments required for a property in Singapore.
This tax is different from rental, stamp duty, and income tax, as property tax is mandatory and often referred to as wealth tax in Singapore.
While property owners will have to pay property tax for their property, the rate at which the authority calculates these property taxes varies every year, making them tricky for property owners.
Furthermore, the Singapore government announced the 2022 budget, indicating the increase in property taxes for non-owner and owner-occupied residential properties in 2023.
So how do you calculate the property tax for Condo and HDB in 2022?
This article will help you understand the basics of property tax rates and how to calculate the annual values, including the property tax payable and time of payment.
In short, if you are planning to buy a new residential property in Singapore, this article is undoubtedly worth reading.
What Is Property Tax?
Property or wealth tax is a yearly tax (property annual value) levied on property owners and is different from other taxes.
For instance, the government charges rental tax on occupied properties, irrespective of the purchase price, property count, or the current scenario of the residential property market.
Likewise, income tax refers to the tax levied on your income, while stamp duty or ABSD rates come into play during a property purchase.
On the other hand, property tax does not relate to other taxes, and a property owner will have to pay the annual fees as per the current property tax table for occupied or vacant properties.
You can seek help from property analysts if you have any doubts regarding non-owner-occupier property or owner-occupier tax rates.
What Is Annual Value (AV)?
Singapore is a haven for property investors, so you may want to purchase a property for investment, especially in a central location.
However, you will have to pay an estimated annual value or property tax based on the current property tax table.
For instance, property A consisting of 1 and 2-room flats, will have identical annual values compared to other properties in the locality.
Likewise, you will have to pay a similar concessionary property tax for a 5-room flat identical to other properties if you use the property for renting purposes.
Here are the things that determine the annual value of a property.
- Identical rental rates of similar properties in the locality
- Property size (1 to 4-room HDB flats will have more annual value than 1-room and 2-room HDB flats)
- Property location (central locations will have higher annual value than other locations)
- Property condition, including relevant physical attributes
Inland Revenue Authority of Singapore (IRAS) monitors AV and validates property owners with the latest alterations in yearly property taxes.
You can visit the myTax portal or contact a property agent to get more details about the latest trends in AV rates.
What Is The Property Tax Rate?
As mentioned above, property tax rates will escalate depending on the value of your property, meaning you will have to pay a higher tax rate if your property value is high.
Furthermore, IRAS introduced new norms for both owner-occupied and non-owner-occupied property tax rates under the new structure.
For instance, owner-occupied properties with an annual value up to $59,000 will have no property tax or minimal rates compared to the previous property tax rates.
Thankfully, owner-occupied properties will continue to benefit from lower tax rates compared to non-owner-occupied properties.
For instance, three-room flat owner-occupiers will have lower tax rates than a private flat used for renting purposes.
On the other hand, non-owner-occupied properties will have to pay property tax based on various factors, which can range from 10 to 20%.
However, the new structure takes a hit on non-owner-occupied properties as they might have to pay more compared to the flat 10% AV in the previous layout.
How To Calculate Property Tax?
The Inland Revenue Authority of Singapore (IRAS) calculates property tax using a specific formula.
Property Tax Rate x Annual Value = Property Tax Payable
This formula calculates the annual value with the property tax rate to determine the property tax payable by a property owner.
For instance, if your property’s AV is $50,000 and the current tax rate for your property is 10%, you will have to pay $5,000 as your property tax payable ($50,000 x 10% = $5,000).
Furthermore, the formula remains unchanged for a subject property or separate property in public housing flats.
How Is The Annual Value Calculated?
As mentioned above, the IRAS calculates a property’s annual value based on the approximate yearly rent identical to the value levied on similar properties in the locality.
However, the annual value is not calculated on the rental income generated by the owner.
This estimated yearly rent excludes maintenance and furnishing fees, including payments for furniture and other household essentials.
So how do you calculate the annual value?
Here are the ways you can determine your property’s annual value on the IRAS portal.
Every legal owner receives a Singpass from IRAS to sign into their account on the official revenue portal.
You can log into your account and visit the “View Property Dashboard” to check the annual value of your property.
This method also works for a property owner who has converted his property into living trusts.
However, ensure that you abide by the new government norms for ABSD (Trust) that promote a sustainable and stable residential property market.
Property investors (paid)
Property investors interested in resale flats or subsequent property purchases can visit the IRAS portal to determine the annual value.
You will have to visit the “Check Annual Value of Property” section on the IRAS portal and check the AV before purchasing.
Since it is a paid service ($2.50/inquiry), you do not require a Singpass to log into the IRAS portal.
Property investors (free)
If you are interested in a property purchase but don’t want to spend money to determine the annual value, you can use the check the AV for free.
You can visit any property portal and search for the annual value for your desired condo.
However, this method often provides inaccurate results as the rental value can be higher than the annual value.
You can compare it with an applicable ABSD rate inquiry to ascertain ABSD treatment on a third-party website that can be inaccurate.
What Are The Late Payment Charges For Property Tax?
Singapore government offers a period of 30 days starting from January 31st every year to settle property taxes.
If you are unable to pay your taxes, the government will charge a 5% penalty after the due date.
Thankfully, you can file an appeal to get a late fee waiver if you have an excellent payment record or pay your complete tax.
However, if you fail to settle the payment, the respective authority can use the GIRO or General Interbank Recurring Order payment system to deduct the amount from your bank account.
But can you get tax exemptions on properties?
While most properties in Singapore have to pay property taxes, some properties like educational institutes, places of worship, and charitable trusts, can enjoy the benefits of tax exemptions.
For instance, a child care centre will not pay property tax, provided it operates based on the Child Care Centres Act.
When Is The Time To Pay My Property Tax?
The Inland Revenue Authority of Singapore allows property owners to pay their property taxes anytime during a calendar year.
However, property owners will have to ensure that they pay their taxes before January 31st every year to avoid a tax penalty.
Furthermore, IRAS will issue notices and reminders to property owners to clear their overdue taxes before reaching the deadline.
However, failing to clear the dues can force the government to access your payroll or personal bank account to settle property taxes.
In short, it would be best to make timely payments or file for a late fee waiver if you have an excellent payment record for the past two years.
Finding Out Your Property’s Annual Value
The Inland Revenue Authority of Singapore provides in-depth information on property like the aggregate ABSD rate and additional non-remittable ABSD rate.
Likewise, you can check your property’s annual value using the IRAS portal (myTax portal) using your Singpass details throughout the year.
The portal offers accurate readings about your property’s annual value, making it a must-have platform for every property owner in Singapore.
However, if you do not have a Singpass, you can visit the portal and pay a $2.50 fee/inquiry to check the annual value of your property.
You can also visit a property portal to determine a property’s annual value.
However, third-party property sites often provide inaccurate information but do not charge fees for property inquiries.
Finding Out Your Property’s Annual Value
Owner-occupied private condominiums or apartments pay lower property tax than non-owner-occupied properties as they purchase them for residential purposes.
For instance, if a condo’s annual value is $8000, the government does not levy any property tax rate or property tax payable on the property.
Likewise, a property with a $47,000 annual value will have a lower property tax rate of 4%, translating into $1,880 of property tax payable for a year.
Tax Payment For HDB Owners
When you search for an HDB property in Singapore, you will often find queries like “ABSD rate increase why” and “Current property tax revised property tax increase” popping in your search result.
Singapore’s housing market contains various taxes, including property tax, which is mandatory even if you leave your property vacant.
In short, both owner-occupied and non-owner-occupied HDB flats have to pay property taxes based on their annual value.
However, owner-occupied HDB flats pay lower property tax than non-owner-occupied ones despite a revision in the latest property tax table.
The Inland Revenue Authority of Singapore monitors property taxes for every property and issues validation notices if a property owner fails to settle his annual tax payment.
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