Taxes in Singapore

When you are buying a property in Singapore you have to go through several steps in order to fulfill all the requirements needed for it, one of which is the payment of taxes.

Now, property tax in Singapore is quite peculiar as it varies depending on the property, the origin of the person and the type of property. For example

Paying the commercial property taxes in Singapore might look like a complicated process but it’s actually simpler than paying the residential property taxes since for commercial properties you don’t have to calculate how much you need to pay because the rate is flat, this means that you only need to know when you have to pay it.

Yet for residential properties, you’ll have to calculate the tax based on your Annual Value and our property tax rate.

Here in this article we are actually going to give you all the tools you need to successfully complete the task of paying your property tax when buying.

We will be telling you everything from the start, from what is the tax on sale of a property in Singapore to how to calculate it and what to do if you can’t pay or why does it change and we will also give you some property tax examples

Kingsford Waterbay Location Map

How to calculate tax in Singapore is an important matter and once you finish reading this article you are going to know every step you need to take in order to engage in the procedure of paying your property taxes when you are buying a property in Singapore.

As you have seen on the other articles, buying a property is a fairly easy duty if you know the steps to do it, paying your property taxes is the same way, so bare with me and start your journey with this article.

The first thing you need to know, it’s obviously.


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What is property tax in Singapore?

Property tax is a wealth tax that you need to pay in order to hold a property. It might sound like the stamp duty you need to pay when buying a property but it’s actually quite different from it.

It is a tax levied on all property owners in Singapore, you need to pay this tax when your property is owner-occupied, tenanted out, or left vacant.

You are required to pay a property tax both when doing the transaction process of buying a property, and when holding on to it; the former is defined as stamp duty, which we will discuss later too, whilst the latter refers to property tax.

Unless you are buying a “Build to Order” or BTO (often defined as Housing and Development Board flat, or HBD flat), you are going to have to pay both taxes, so you should plan accordingly and manage your budget in order to be able to afford the costs.

Something else you should take into consideration when doing your property tax search in Singapore is that you may have to pay income tax on the income derived from you renting a property, yet property tax is a separate tax, this means that, if you are renting out your property, you are required to pay both income tax and property tax.

Property tax is not the only tax you need to pay when you possess a property, as we said before; when you purchase a property you are bound to pay for stamp duties, and we will dive a bit into each type of stamp duty, what they are and in which cases you need to pay them.

What is property tax in Singapore?

BSD is a type of tax that you need to pay on documents signed during the process of purchasing a property located in Singapore.

BSD is one of the stamp duties you’ll have to pay when buying a house , you won’t have to pay extra is it’s your first house but the stamp duty for buying a second home increases as then you have to pay the additional buyer’s stamp duty we will discuss later.

The stamp duty values vary and are based on the cost of the condo you wish to buy in Singapore.

We can then deduce that the cost of buying a condo in Singapore can be raised significantly by the stamp duties you have to pay.

Now we will talk a bit about in which cases you are required to pay BSD.

You need to pay BSD when documents pertaining to the purchase of a property are elaborated. BSD will be calculated according to the purchase price as stated in the document to be stamped or market value of the property in case this one is higher.

In simpler words, the amount of money you need to pay for BSD will be calculated on whichever is higher between market value and purchase price of the property.

If document you are going to stamp states the benefit and it is a cash discount to be given to the purchaser upon the elaboration of the document the amount of discount may be deducted from the purchase price of the property in order to determine what is the amount that will be considered for stamp duty purpose.

This only happens in the cases where the net price is still reflective of market value.

If the document you are going to get stamped states a non-cash benefit to be given, you will not be able to get any deductions from the purchase price for stamp duty purpose.

If the cash or non- cash benefit is not stated in the document you need to stamp, you also get no deductions from the purchase price for stamp duty purpose.

The first sale and purchase document executed is bound to full duty BSD, which means you have to pay the full value of the Buyer’s Stamp Duty for that document. Subsequent documents relating to the same sale procedure are bound to Stamp Duty.

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Stamp Duty on a Single Contract for Multiple Properties

When there is only a single contract for the purchase of multiple properties followed by individual documents for the purchase of each property, the single contract should be stamped at full value duty based on the total purchase price.

This is not something that everyone uses but it is important that you know it in the case an investment of that kind presents to you.

Stamp Duty on Multiple Documents

When you have multiple documents that depends one from another, only one of the documents is required to be stamped at full value duty, based on the total purchase price of all the related properties.

This is more likely to be used, so take note of it so you don’t pay more than what you need for when purchasing a property.

Additional Buyer’s Stamp Duty (ABSD) Singapore

If you are asking yourself what is Additional Buyer’s Stamp duty.

Singapore property ABSD is defined as Additional Buyer’s Stamp Duty and it is a tax you have to pay on top of the BSD if you are held liable according to the laws of Singapore.

It is also calculated based on the property price and corresponds to the same documents that the BSD does while being executed for stamping (you can help yourself calculate it by using a calculator for ABSD in Singapore)

I’m sure that if you are buying a property, you might be asking yourself, can ASBD be paid by CPF?

The answer is yes, ASBD is payable with CPF money provided you have enough funds or, if you are buying a second property, provided you have already repaid what you used from your CPF account to buy your first one.

The stamp duty on buying a property increases with the number of properties you acquire, for example your 3rd property stamp duty will be higher than your second or your first one.  In simple words, the stamp duty on property purchase scales progressively.

We can deduce from our previous statement that the stamp duty for first time buyers is fairly lower.

While not everyone needs to pay ABSD, you need to know if you are held liable and in which instances you might be held liable in order to pay the corresponding amount for stamp duty.

You can be held liable in 3 instances: If you are not an individual, If you are not a Singaporean citizen, or if you own more than one residential property.

Additional Buyer’s Stamp Duty (ABSD) Singapore

If you are asking yourself what is Additional Buyer’s Stamp duty.

Singapore property ABSD is defined as Additional Buyer’s Stamp Duty and it is a tax you have to pay on top of the BSD if you are held liable according to the laws of Singapore.

It is also calculated based on the property price and corresponds to the same documents that the BSD does while being executed for stamping (you can help yourself calculate it by using a calculator for ABSD in Singapore)

I’m sure that if you are buying a property, you might be asking yourself, can ASBD be paid by CPF?

The answer is yes, ASBD is payable with CPF money provided you have enough funds or, if you are buying a second property, provided you have already repaid what you used from your CPF account to buy your first one.

The stamp duty on buying a property increases with the number of properties you acquire, for example your 3rd property stamp duty will be higher than your second or your first one.  In simple words, the stamp duty on property purchase scales progressively.

We can deduce from our previous statement that the stamp duty for first time buyers is fairly lower.

While not everyone needs to pay ABSD, you need to know if you are held liable and in which instances you might be held liable in order to pay the corresponding amount for stamp duty.

You can be held liable in 3 instances: If you are not an individual, If you are not a Singaporean citizen, or if you own more than one residential property.

If you are not an individual

This one speaks for itself, this happens when you are buying a property as a part of a collective and not as an individual. Since the property is being bought as a partnership, all the members are held liable as the risk involved is proportional to the quantity of people involved.

If you are not a Singaporean Citizen

This one speaks for itself too, basically if you are not a Singaporean Citizen you are held liable and have to pay ASB, however, the amount you have to pay varies depending on whether you have applied for the citizenship.

For example, a Singaporean citizen will have to pay 7% ASBD, while a Singaporean Permanent Resident (applied for citizenship) will have to pay 10%, yet if you didn’t apply for the citizenship and are a foreign investor, you’ll have to pay a greater sum, you’ll have to pay 15% for ASBD.

So as you can see, Singapore favors its citizens and residents over foreign investors.

If you own more than one residential property

This one might look tricky but it is fairly simple too. If you plan to own more than one property you will need to pay ASBD for each property you purchase after this first one.

You are held liable for this because every property purchase is a risky investment and if done incorrectly it might derive on financial damage, so you have to make sure that you can buy the property AND pay the ASBD, which will make you take more preventive measures when going through the purchase process.

In simple words IRAS Additional Buyers’ Stamp Duty, commonly known as ABSD, is a temporary cooling measure implemented to calm the property market and prevent buying frenzy.

ABSD can only be applied based on the number of residential properties you own.

This means that regardless of how many commercial properties you own, your second residential property purchase as a Singaporean will be subjected to 7% of ABSD and this percentage raises if you are not a Singaporean citizen.

Non Singaporean Exempt from ABSD/Additional Stamp Duty Exemptions

There are a few citizens from other countries that are exempt from paying ABSD and are treated as Singaporeans.

The reasons that people from those countries are treated as equivalent to Singaporean is due to existing Free Trade Agreements.

The citizens and permanent residents (PR) of Liechtenstein, Norway, Switzerland, and Iceland are the ones that are exempt from this duty.

For United States, only the citizens may apply for such ABSD remission.


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The List of Overseas Property Investment

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Allowing you to start receiving Full Passive Rental Incomewith 0 Monthly Instalment and ABSD.

On top of that, the capital appreciation are usually muchfaster due to the low quantum!

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Additional Buyer’s Stamp Duty Refund

This is a clause that most people could find is most hindering to people that upgrades properties and is certainly unbalanced between private and public housing, mainly because of the difficulty in enforcement.

If you own an HDB and plan to buy a new HDB under Build-To-Order scheme, you would not pay ABSD because you are forced to sell the previous flat within 6 months from the launch of the new flat.

Nevertheless, the case is different for private properties. If you buy a second private property that is under construction, you will still need to pay for ABSD within 2 weeks upon signing the Sales & Purchase Agreement.

However, you may apply for ABSD refund when you have sold your first property. This is provide both the new and the existing property is your owner occupied property, which means you live in it.

How to avoid ABSD

To avoid ABSD some couples which have joint ownership resort to means like decoupling or buying under children’s’ name in order to reduce stamp duty costs. However, the important thing to note is the existence of Total Debt Servicing Ratio (TDSR).

Reducing to a single person’s name would mean that the person’s income has to be capable of supporting the condo loan in Singapore.

This is by far the only way to get around ABSD. Another way of using trustee would be even more costly because it requires the property to be fully paid.

Will ABSD be lifted?

A high number of buyers in Singapore are saying that ABSD should be removed soon because the sales volume is dropping drastically.

But are there actually any signs that foreshadow the lifting of the ABSD?

Well, if we look back to the history we can see that measures are lifted most of the time during recessions and crisis.

In short, ABSD will be lifted when it doesn’t cause a buying frenzy in the market, this means that it will be listed when the buying rate doesn’t increase because of the lift, it sounds quite odd but it works this way.

In 1973 when the inflow of foreign funds caused a steep spike in property, regulations that foreigners couldn’t acquire residential properties arrived.

When things cooled off and the rules relaxed a little for foreigners to purchase again, the market didn’t rise as much as before.

Another example, in 1986, recommendations were made to help property market because of the economic recession of 1984 and 1985, which made people reluctant to buy properties.

So if you are asking, when is ABSD removal happening?

The most probable answer would be when you no longer want buy because of the lift, or when you can’t afford to buy, especially due to bank not as willing to give out loans for condos in Singapore. Either way we can expect ABSD to stay around for a bit longer.

As you can see ASBD in Singapore is not something to take lightly as there’s a lot of information and speculations about it, like ABSD being removed in Singapore or more people being exempt from ABSD. So be wary and double check everything you find online.

Here I provide a Singapore Additional Buyer’s Stamp Duty table for you to guide from:


1ST PROPERTY 
 2ND PROPERTY   3RD PROPERTY ONWARDS
SINGAPOREAN 0% 7%  10%
SINGAPORE PR  5%  10% 10%
FOREIGNER  15% 15% 15%

On this table we can see that the additional home stamp duty is higher than the single one as well as the stamp duty for foreigners.

You can use a BSD or ABSD calculator in order to find out how much your stamp duty for buying a house is. It will depend on if it is a joint purchase or not, as well as the property price and value.

After you have calculated your stamp duties then you should stamp your documents, and IRAS now provides an e-stamping service in Singapore

Singapore Stamp Prices vary, as there are stamp for letters, mail and then stamp for properties, they will be based on your ABSD and BDS which you can calculate using an online calculator.

Seller Stamp Duty (SSD) in Singapore

The Seller Stamp Duty (SSD) is a tax imposed for selling your property, within a certain time period of buying it. The seller stamp duty applies for commercial properties in Singapore too.

I was introduced by the government as a cooling measure for the property market, much like the ABSD.

Seller Stamp duty for private properties and for commercial ones, work similarly, this means that SSD is one of the few taxes that works almost the same way for most types of properties.

The Seller stamp duty for industrial properties works similar to the other ones, it lowers as the time you have the property in possession increases, yet the rates vary and are lower for industrial properties.

There’s no additional seller stamp duty in Singapore as with the BSD.

You also don’t need to know how to calculate seller stamp duty, you can just go in the IRAS website and look at the chart, although we have provided on for you.

Here’s a Singapore Seller Stamp Duty  chart, which portraits how it worked before and how works after the government eased the measure.

SSD for purchase of private property 0-1 yr 1-2 yrs 2-3 yrs 3-4 yrs >4 yrs
Before 11 Mar 2017 16% 12% 8% 4% No SSD
After 11 Mar 2017 12% 8% 4% No SSD No SSD

 

It is not necessary to use a seller stamp duty calculator, but if it makes your life easier, go ahead and use it.

Total Debt Servicing Ratio (TDSR) in Singapore

The Total Debt Servicing Ratio (TDSR) is defined as a framework established by the Monetary Authority of Singapore (MAS) in 2013 in order to promote responsible lending and borrowing, encourage financial prudence and, in the long run, to curb the risk of a market disaster.

How do I calculate TDSR?

The general rules of the TDSR state that your total monthly debt obligations must not exceed 60% of your gross household monthly income.

This provides an upper limit on the maximum amount of money you can borrow from financial institutions for your monthly repayments.

The formula to calculate TDSR is:

TDSR = Total monthly repayments/Gross household monthly income

Mortgage Servicing Ratio (MSR)

The Mortgage Servicing Ratio (MSR) is a component of the TDSR which is an important element to take into consideration when applying for a home loan.

MSR dictates that your total monthly mortgage repayments must not exceed 30% of your gross household monthly income.

You should know that the 30% MSR cap is included in the 60% TDSR limit.

In simpler words if your MSR is 30% of your gross household monthly income, you have a remainder of 30% for your other financial commitments for example Car loans, credit cards, etc.

Here is the formula to calculate MSR

MSR= Total monthly mortgage repayments/Gross household monthly income

There’s another relation between mortgage and stamp duty and that is that it might be exempted from stamp duty. When does this happen? Well, when property outside Singapore is used as a security and the document is signed under hand, it is exempted from Stamp Duty.

Now that we have explained everything you need to know all the stamps duties, TDSLR and MSR, we need to go back to the property tax because there are several topics we still need to discuss in order to give you the best insight about the subject.

The first of the topic we will take into consideration is

Property tax on residential properties

New property tax sg rules for residential properties were introduced in Budget 2010 and enhanced in Budget 2013.

Before the modifications, property tax was calculated at a flat rate for all residential properties regardless of the value. A more progressive tax regime on residential property was introduced then as it is socially equitable since taxpayers with residential properties with a higher value have to pay higher property tax. Imagine if you paid the same amount for taxes as a person that earns several times your annual income, doesn’t seem fair right?

This new tax structure does not hurt the competitiveness of the overall tax regime or reduce the incentives for enterprise, as the differences are not humongous but are enough to make a difference.

Property tax on non residential property

Property tax for commercial properties in Singapore and also for industrial properties, are taxed at a single flat rate, this means that the rate does not vary and it is different from the property tax for landed properties in Singapore, which follows the progressive scheme. The property tax rates for each type of property can be found on IRAS’ website.

When do you have to pay property tax?

If you are new in the country or haven’t bought your first home yet, you might not know when you need to pay your property taxes, so we will give you this information in this article in order to stop you from being fined for not paying your taxes on time.

Property taxes are due, every year, on 31st January as the latest you can pay, if you don’t pay by this date, there are consequences we will discuss below.

In the event that you are late, you will get a 5% penalty on top of the unpaid tax. For any ad-hoc bills, due to for instance a new assessment or reassessment, you are given one month to settle the tax.

Now, if you have failed to pay tax even after the penalty has been issued, the government is legally able to get the tax amount from wherever it can; whether it be your bank account or your payroll, anything.

This means that unless you don’t have any money in the country, or have it hidden under your mattress, the government will get the money you owe them, so it’s better to just pay the tax in order to prevent unpleasant surprises like having missing money from your bank account.

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How to calculate your private property tax in Singapore?

Alright, here comes the math, I really hope you are not afraid of numbers; although, you can just use a calculator, just pay attention to what you have to put in it.

The annual property taxes in Singapore are calculated by multiplying the annual value (AV) of your property by the appropriate property tax rate. So you actually have to look up which property tax rate is appropriate for you in order to have an accurate calculation of you property tax.

If you write what I said before as a formula, it would like something like this.

Annual value X property tax rate = property tax

I know you still don’t know what annual value is, but I will explain that in short so don’t worry.

How much do you have to pay?

As I told you before, there’s no fixed rate you have to pay for property tax for a condo in Singapore, unless of course you plan on buying a non residential property, which rates are calculated as flat property tax and can be found on the IRAS website.

If you want to know how much you have to pay, you have to look for your property tax rate, and once you have that data apply the formula I gave you before, once you do that, you will have a number. This number is your property tax which then you have to pay before January 31st

Also be aware that in Singapore, the second property tax will be higher than your first one, so keep that in mind when you plan to purchase a second property.

What do I need to calculate it?

You only need 2 things to calculate your property tax.

Your annual value and your property tax rate both will be explained in detail next so you are able to calculate them and then use the formula I gave you before.

If it’s your 2nd property tax in Singapore; we will also teach you how to calculate its value based on rent values.

Annual Value, everything you need to know

Finally! The mythical Annual Value, I’m finally going to explain you what it is and how to calculate the annual value of property in Singapore.

The Annual Value can be defined as the amount of money you could earn by renting out your property for a year, minus any furniture rental cost and general maintenance costs.

It is in simpler words your yearly passive income if you were to rent out your property for the full 12 months.

The Annual Value is variable as the rental prices are not fixed. Because of this, when areas rejuvenate and rental prices go up, your annual value does too, and by extension the property tax you will need to pay each year. Similarly, with an unfavorable market for renting, your annual value will go down, and your tax will follow the same path.

Whenever your Annual Value is changed, the IRAS will send you a notification regarding the modifications made.

Alternatively, as we told you before, you can simply log on to your personalized tax portal, and check up on the value at any time. This means you don’t need to wait for the notification to know you Annual Value at any given time.

If your Annual Value is reassessed, and you have any issue with it then you can object to the amount (for instance when the actual rent is substantially below the calculated rent by the IRAS).

You only have 30 days from the date of the valuation notice to do so and you cannot however object the tax rate itself.

If you want to check the Annual Value of a property prior to buying it, you can use the e-Valuation List; however, every time you decide to check in this site cost money, so search smartly and only if you absolutely need to.

How is Annual Value calculated?

The Annual Value is calculated by taking the monthly market rent of the unit and multiplying it by 12 (because there are 12 months in a year). The market rent is defined as the rent after deducting reasonable rentals for furniture and maintenance fees.

Basically, the Inland Revenue Authority of Singapore (IRAS) factors in the transacted rents of similar units located nearby and show a value based on the location, size, conditions and other physical attributes of the property.

Some property owners believe is that they do not have to pay their property tax based on the Annual Value because they are currently staying in the unit. Do not fall in this category as this might lead to penalties imposed by the government. Instead, do your due research and make an accurate calculation of your Annual Value.

Of course it is not true that some owners don’t have to pay their property tax based on the Annual Value just because they reside in the unit.

It doesn’t matter whether the house is vacant, owner-occupied or rented to a tenant; the property tax is always determined by the Annual Value of the property, it doesn’t matter if it’s your 2nd property tax, in Singapore the Annual Value determines it.

However it is also important to know that owner-occupied properties will pay less tax as they fall into a different category, this means that if you are trying to calculate your second property tax in Singapore, it will be higher as it is always assumed that you rent it out, which adds an income tax to the equation.

Why do I pay more tax if I don’t live in my property? Because vacant units and rented units are categorized as Non-Owner-Occupied Properties and as such have to pay more tax both for property holding and for stamp duty.

An example to help you calculate annual value:

Matt rents out his residential property for $7000 per month. His monthly maintenance costs amount to $600, and the furniture is rented for $7500 per year.

The annual value in this case is the sum of the following:

Rental income = $7000 X12 months = $84,000

Cost of furniture rental = $7500

Cost of maintenance = $600 X 12 months = $7200

Annual Value = annual rental income – annual cost of furniture rental – annual cost of maintenance

Annual Value = $84,000 – $7500 – $7200 = $69,300

Can you challenge the Annual Value imposed by the IRAS?

Well, you might be thinking something like “that’s not possible” , the fact is that it is indeed possible and the IRAS actually provides a link for it, do if you don’t feel like your Annual Value is fair, go ahead and challenge it, you might end up saving some money.

As I just told you, the IRAS do provide a way for you to appeal if you feel that the AV for your property is not fairly determined, yet, you do need to back up your claims by providing supporting documents to IRAS showing that the market values have indeed dipped or that the rent rates for similar properties are much lower.

As long as you have supporting evidence, challenging your Annual Value is a viable option.

In simpler words, if you don’t agree with your property tax, you should contact IRAS in Singapore and challenge your Annual Value as the property tax rates can’t be challenged.

But what happens if you are unable to pay?

If you are right know under heavy financial trouble and are not able to pay your property tax, you can contact IRAS to arrange for another way of payment.

IRAS will then take into consideration your request on a case-by-case basis, this is done so that everyone is given a fair treatment and to deter scammers from paying their due tax by saying that they can’t pay it.

Does annual value change?

Yes, Annual Value does indeed change, but don’t worry it is not arbitrary; it follows a set of rules that you can check to make sure that your AV is fairly calculated. If you are not content with it, you can apply what we taught you on the previous subject and appeal, provided that you have the evidence to back it up.

Since prices are not fixed, Annual Value is not either, as it is based on the market rent prices, which means that if it moves, the AV moves too.

Next I’m going to explain to you the reasons why Annual Value changes.

Why does it change?

As property tax is a wealth tax based on property ownership, Annual Value is reviewed and adjusted accordingly in order to reflect the changes in market values of comparable properties. This means that it follows the property tax statement in Singapore.

Your Annual value might be raised, lowered or kept the same, this all depends on whether the market prices go up, down or maintain.

Property Tax rates

As we have been saying before, the amount of tax rate you have to pay depends on various factors, such as your annual value and whether you live in your property yourself or not.

Different people will have different tax rates, and in Singapore it is allocated in a progressive way, for example, the higher your property value, the higher your annual value, and therefore the higher the tax rate.

The same way, if you do not live in your property, it is assumed that you rent it out. Having more properties often reflects a higher wealth, which means that tax rates are also set higher. This is to promote equality within the Singaporean society regarding taxes, as everyone will have to pay their taxes based on their wealth rather than a fixed rate.

Do I have to pay property tax on my home when I am an owner-occupier and not deriving rental income?

The short answer is yes, and i will tell you why.

Property tax bases itself on property ownership and therefore is issued regardless of whether the property is owner-occupied, vacant or rented out.

However, there is an incentive for having owner-occupied properties; there is a lower tax rate for owner-occupied residential properties.


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The Cheapest Condos In Singapore

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Do I have to pay property tax on my home when I am an owner-occupier and not deriving rental income?

The short answer is yes, and i will tell you why.

Property tax bases itself on property ownership and therefore is issued regardless of whether the property is owner-occupied, vacant or rented out.

However, there is an incentive for having owner-occupied properties; there is a lower tax rate for owner-occupied residential properties.

If I rent out my residential property do I have to pay tax on my rental income and on the property? Am I being taxed twice?

This subject might seem a little confusing for you as there are two taxes involved, but I’m going to explain you exactly what happens so you don’t have to worry about being taxed twice.

As you can assume by now, there is no double taxation happening.

Property tax is imposed based on property ownership and it is different from income tax on the rental income, which is a tax on the income which an individual earns from renting one or more properties.

In conclusion, these are two different taxes imposed on two different areas; this means there is no double taxation. It is more like, having a tax on food and then having a tax on clothes, no double tax on food or on clothes.

Owner Occupied Residential Properties

Under the new property tax structure, any property with an Annual Value below $8,000 won’t have to pay any property tax.

More importantly, all homes with Annual Values up to $59,000 will either pay no property tax or lower effective property tax, as compared to the property tax payable under the previous structure.

Property tax for Executive Condo, HDB and DBSS are different, for example, if you buy a new or resale HDB, DBSS flat or new EC, you do not need to apply for the owner-occupier tax rates.

Applying for Owner-Occupier Tax Rates

If you are residing in your property but it is currently taxed at “Residential Tax Rates”, you aapply for the owner-occupier tax rates using IRAS’ website.

Once you have submitted an application, you can check the status of the same by using IRAS’ website as well

The new rates took effect on 1 January 2014 and 1 January 2015.

Annual Value (AV) Progressive Tax Rates Property Tax Payable
First $8,000 0% $0
Next $47,000 4% $1,880
Next $15,000 6% $900
Next $15,000 8% $1,200
Next $15,000 10% $1,500
Next $15,000 12% $1,800
Next $15,000 14% $2,100
Above $130,000 16%

Non Owner Occupied Residential Properties

Non Owner Occupied properties are defined as residential buildings which are not owner-occupied and do not include residential land.

Non Owner Occupied residential properties’ property tax rates will be based on a progressive scale which goes from 10% to 20%, up from a flat 10% previously.

The new structure took effect from 1 January 2014 as well.

Annual Value (AV) Progressive Tax Rates Property Tax Payable
First $30,000 10% $3,000
Next $15,000 12% $1,800
Next $15,000 14% $2,100
Next $15,000 16% $2,400
Next $15,000 18% $2,700
Above $90,000 20%

 

Here you can observe with numbers that the rates for Owner-Occupied properties are much lower than the Non Owner Occupied ones, this is done to encourage the former as it promotes less risk.

Property Tax Act Singapore

The property tax act in Singapore is defined as an Act to provide for the levy of a tax on immovable properties and to regulate the collection thereof. This means that it is established in order to regulate the purchases of properties.

Is the use Capital Value to estimate Annual Value for property tax calculation viable?

For some countries it might be viable to use the Capital Value to estimate the Annual Value for property tax as their economy is different and this might facilitate the calculations, but In Singapore, rental transactions of comparable properties are used to determine the Annual Value of the property for the purpose of property tax, for two reasons.

The first reason is that there are generally more rental transactions than sales transactions; this allows Annual Value to be determined for each property based on similar properties.

The second reason is that movements in sale prices tend to be volatile than rental prices, which means that using rental transactions to derive the Annual Value will inherently help to keep property tax more stable for property owners.

The practice of using market rents to determine the Annual Value is not only used in Singapore other countries have adopted the model as well, like for example Hong Kong and Malaysia.

You can check property tax online

You should know that there are calculators to facilitate the process of buying a property in Singapore. Most of these will help you know how tax is calculated in Singapore.

You can use a Singapore tax calculator to find out your property tax, you just need to enter the data we told you before. Some websites provide integrated property calculators in order to make your work easier.

IRAS for example, provides an interactive online property tax calculator for you to easily work out how much is your property tax in Singapore. The beauty of these online tools is that they also integrate the rebates applicable each year for various types of properties.

Various Singapore tax calculators are available online, yet you have to make sure that they are correct by checking several of them and making sure the results they give are the same. If the results of your resident tax calculator are different, you should stick to the ones that output a similar results between them as the one that gives out different result might be outdated.

The Singapore tax calculator for non residents (Available in the IRAS website) should work different as the rates for foreign investors in the country are not the same as for the citizens, because of this, their property tax should be higher and the calculator should reflect that.

You should also know that you can check the property tax of any property in Singapore if you know the owner’s NRIC.

You can pay property tax via

  • AXS
  • SAM
  • Internet Banking

Exceptions to the progressive property tax

You should know that there are calculators to facilitate the process of buying a property in Singapore. Most of these will help you know how tax is calculated in Singapore.

You can use a Singapore tax calculator to find out your property tax, you just need to enter the data we told you before. Some websites provide integrated property calculators in order to make your work easier.

If you do fall into one of the categories I will list below, you will have a flat rate of 10% instead of a progressive tax.

The categories that are exempt from progressive tax are.

  • Accommodation facilities within any sport and recreational club
  • A Chalet
  • A child care centre, a student care centre, or a kindergarten
  • A Welfare home
  • A hospital, hospice, place for rehabilitation, convalescence, nursing care, or any institutions aimed at similar purposes.
  • A Hotel, a backpackers’ hostel, a boarding house or guest home
  • A Serviced apartment
  • Staff quarters that are part of any property exempted under s6(6) of the property Tax Act
  • A Student’s boarding house or hostel
  • A Workers’ dormitory

Why does Singapore only have property tax as a wealth tax?

Each country has its own type of wealth taxes such as property tax, estate tax, inheritance tax and capital gains tax. The challenge is to design a wealth tax regime that is equitable, cannot be easily avoided, and does not impede economic activities.

We eliminated estate duties in 2008 as its greatest impact was not on the wealthiest individuals, who tended to manage their financial assets globally. In doing so, the Government explained that property tax would be retained as the only wealth tax as it could be structured more equitably, with the owners of more valuable properties paying more. We also do not levy wealth taxes on any other forms of wealth such as cash or equity for practical reasons – monies can easily be shifted to similar assets in other financial centres, and such taxes will impact Singapore’s competitiveness as a financial centre.

Property tax cannot be avoided or tax-planned away. It does not affect our middle and upper-middle-income group disproportionately compared to wealthier ones. It also does not impede economic activities or our competitiveness.

We have thus kept property tax as our wealth tax based on property ownership.

Removal of the Property Tax Refund Concession for Vacant Properties

The removal of the property tax refund aligned the property tax regime with the policy intent of property tax, which is to tax property wealth irrespective of whether it is occupied or not. This also ensures consistency in the tax treatment of all vacant properties.

In this article we taught you that knowing how to determine your property taxes is an important part of your life, even more if you plan to invest in properties as taxes are a huge part of the procedure and the maintenance of a property.

To wrap this up

Having taught you everything you should know from what is a property tax to how to calculate it and when you have to pay it, I hope that you are now confident enough the venture into the investing world.

As you can see from this article, calculating your taxes is not a difficult task, it might take a couple minutes at most if you have all the information you need. If you don’t it will only take five minutes to find what your annual Value and property tax rates are. After that you only need to break out your calculator and throw in the numbers.

It is always a pleasure helping you in your journey towards investing in the world of real estate; it is one of the most fulfilling markets and one of the most rewarding investments. Any investments you make right now with our advices with most likely last a very long time.

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