What You Need To Know About Property Tax In Singapore
Whether you’re a property investor or a homeowner in Singapore, you are obligated to pay property taxes every year. But if you’re unsure of how to calculate your Singapore property tax, this guide will explain everything you’ll need to know.
We will be covering how property tax is determined in Singapore so you can do proper budgeting. As well as how the progressive property tax system works – including for private properties, office spaces, commercial buildings, factories, HDB flats, vacant lots, and more.
What Is Property Tax?
Property tax refers to a wealth tax that property owners are required to pay for holding onto the property. You’ll have to pay a property tax bill for buying the property (including stamp duty), as well as for holding onto it (property tax). Unless you’re purchasing a BTO, you’re required to pay both types, so it’s important to make the necessary arrangements.
Singapore property tax is levied on owners if the property is left vacant, leased out, or owner-occupied. You may also be required to pay income tax if you’re earning revenue from renting out of the property. However, the Singapore property tax is a different form of tax. In other words, a landlord may have to pay both property tax and income tax.
Now, Singaporeans and foreigners holding onto the property can pay property tax online (it’s best to sign up for GIRO to enjoy hassle-free payment). Additionally, you can pay your property tax in Singapore at any time of the year.
The only requirement is that you must pay it by 31 January each year. The Inland Revenue Authority of Singapore (IRAS) often sends reminders to property owners to pay their property taxes, so it can be difficult to miss the deadline. But what will happen if you actually don’t pay your property tax in Singapore on time?
If you miss the deadline, a 5 percent penalty is imposed on any outstanding property tax. If you think that you can ignore IRAS and skip paying, then you’re in for a rude shock. The government has the authority to obtain the property tax from wherever it wants. It can even get its taxes from your payroll or bank account. So you don’t want to skip payment of property tax in Singapore.
How Is Property Tax Calculated In Singapore?
As we already mentioned, you are required to pay a given property tax in Singapore if you’re in the ownership of any kind of property. Generally, there are two kinds of properties in Singapore:
- Residential properties like condos, HDB flats, bungalows, and apartments
- Non-residential properties like industrial and commercial buildings
So how is property tax determined in Singapore? The annual property tax is determined by multiplying the annual value of the property by the correct property tax rate. Therefore, the formula would look like this:
Your Property Tax = (Property Tax Rate) x (Annual Value)
But to actually understand the condo property tax calculation and the actual property tax payable, you need to fully understand both components: Singapore property tax rate and property annual value.
What Is The Tax Rates For Singapore Property?
Progressive tax rates are levied on all residential properties in Singapore.
- For owner-occupied properties, you’re required to pay a lower tax rate
- For non-owner-occupied properties, you’re required to pay higher tax rates
With the reviewed tax rates, you do not have to pay as much property tax on an owner-occupied property, but you will have to pay higher tax rates if you decide to lease out the property.
As you can see, it is much more profitable to be classified as an owner-occupier instead of just a property owner. However, even if you decide to occupy many or all of your properties, only one property will qualify as an owner-occupied home.
What Is Annual Value?
Annual Value refers to the estimated annual rental income that the property can make if it were rented out, minus furniture, furnishings, and maintenance costs. Mainly, it refers to your annual passive income for the property if you were to rent it out for the entire twelve months.
IRAS is tasked with determining the annual value of properties in Singapore. Moreover, it clarifies how annual value is estimated – based on the prevailing market rent of comparable or similar properties rather than the actual income collected.
The manner in which it is estimated is the same for both owner-occupied and non-owner occupied properties. The value changes each year since rental prices change over time. As a result, when locations improve and market rent prices increase, your annual value (and property tax) will also increase. Likewise, if the market is down, your annual value (and property tax bill) will also go down.
Finding out Your Property’s Annual Value
You can check the annual value of your property in two ways:
One way is to visit the IRAS myTax portal . At this IRAS portal, you can check your property’s annual value at any time free of charge. Checking it at least once every three months will allow you to stay up-to-date with the annual value of your property.
The second way is to check the annual value of similar properties in Singapore using the paid annual value of property tool, which charges $2.5 for each lookup. IRAS considers factors such as size, location, and any other physical qualities of the property when determining a realistic comparison to your home to estimate the prevailing monthly market rent.
Taking the same factors into account can allow you to find market values of similar properties in your area and make a good estimate of the annual value of your property.
Sum Of Yearly Rental Income = $6000 X 12 months = $72,000
Sum Of Annual Maintenance Fees = $500 X 12 months = $6000
Sum Of Annual Cost Of Rental Furniture = $6000
Annual Value Of Property In Singapore = (Yearly Rental Income) – (Annual Maintenance Fees) – (Annual Costs Of Rental Furniture)
Therefore, annual value of the property = $72,000 – $6000 – $6000 = $60,000
If dealing with numbers is not your cup of tea, simply use the IRAS online calculator. There are also many other online property tax calculators that you can use to make the process as easy as possible.
If you think IRAS’ estimate of your property’s annual value is unfair for whatever reason, you can file an appeal with them within 30 days from the day of the Valuation Notice.
For your appeal to be successful, however, it must meet the AV conditions, and not just because you consider your IRAS’ estimate too high or you are currently facing financial difficulties. If you still object to the IRAs’ decision after the appeal, you can make a further appeal to the Ministry of Finance – whose decision should be final.
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Residential Property Owner-Occupier Tax Rates
The different types of owner-occupier residential properties include HDB flats, condominiums, and other residential properties where the property owner occupies or lives in the property. Owner-occupier residential properties are required to pay owner-occupied property tax.
To boost the progressivity of the Singapore property tax rate structure, the tax structure for owner-occupied residential properties was revised and has been in place since 11 Jan 2015. Overall, the changes made in the new tax structure will lower property tax income by $19 million per year.
Owner-Occupier Tax Rate Table (Effective From 1 Jan 2015)
Annual Value (AV) ($) For The First $8,000
- Property Tax you will need to pay would be 0% (which is $0)
For The Next $47,000 ($8,000 + $47,000 = $55,000)
- Property Tax you will need to pay would be 4% (which is $1,880)
For The Next $15,000 ($55,000 + $15,000 = $70,000)
- Property Tax you will need to pay would be 6% (which is $2,780)
For The Next $15,000 ($70,000 + $15,000 = $85,000)
- Property Tax you will need to pay would be 8% (which is $3,980)
For The Next $15,000 ($85,000 + $15,000 = $100,000)
- Property Tax you will need to pay would be 10% (which is $5,480)
For The Next $15,000 ($100,000 + $15,000 = $115,000)
- Property Tax you will need to pay would be 12% (which is $7,280)
For The Next $15,000 ($115,000 + $15,000 = $130,000)
- Property Tax you will need to pay would be 14% (which is $9,380)
Annual Value (AV) Of Above $130,000
- Property Tax you will need to pay would be capped at 16% of the AV
Residential Property Non-Owner-Occupier Tax Rates
Non-owner occupied residential properties include HDB flats, condominiums, and other residential properties where the property owner does not occupy or live in the property.
The tax structure for these non-owner-occupier residential properties has also been revised to boost the progressivity of the property tax rate. Non-owner-occupier residential properties fall under the following property tax rates categories, with the exclusion of those stated in the exclusion list
Non-Owner-Occupier Tax Rates Table (Effective From 1 Jan 2015)
Annual Value ($) For The First $30,000
- Amount of Property Tax Payable would be 10% (which is $3,000)
For The Next $15,000 ($30,000 + $15,000 = $45,000)
- Property Tax Payable would be 12% (which is $4,800)
For The Next $15,000 ($45,000 + $15,000 = $60,000)
- Property Tax Payable would be 14% (which is $6,900)
For The Next $15,000 ($60,000 + $15,000 = $75,000)
- Property Tax Payable would be 16% (which is $9,300)
For The Next $15,000 ($75,000 + $15,000 = $90,000)
- Property Tax Payable would be 18% (which is $12,000)
Annual Value Of Above $90,000
- Property Tax Payable would be capped at 20% of the AV
Residential properties mentioned on the exclusion list are taxed at 10 percent. Therefore, once you fully understand the IRAS property tax rate and annual value, you can determine your property tax in Singapore.
Scenarios Where Property Tax Can Be Exempted
In Singapore, some properties qualify for a property tax exemption. Such properties include those that are used only:
- As a place of worship
- For schooling or education purposes
- For charitable causes
- For purposes that contribute to the social development of the country
As you can see, property owners in Singapore are required to make property tax payment each year. Not planning for Singapore property tax when shopping for a mortgage is going to haunt you at the end of the year. So make sure to consider the property tax you’ll be required to pay, determine how much it will be, and budget for it accordingly when looking to buy a property.
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