By Yeo Sam Jo, The Straits Times, 9 Dec 2014
This comes as the estimated annual market rents of properties, or annual values (AVs), will be lowered by about 3 per cent on Jan 1, to reflect the weakening rental market, said the Inland Revenue Authority of Singapore (IRAS) yesterday.
The lowering of AVs means owners residing in three-, four-, five-room and executive flats can save about $12 to $14 in property taxes next year compared with this year.
Once the changes to property tax rates this year are factored in, owners living in these flat types will save between $42 and $54 by way of taxes next year, compared with last year. So, someone living in a three-room flat will pay between $1.60 and $49.60 next year, versus between $44 and $92 last year.
Property tax payable on HDB flats is calculated by applying property tax rates on AVs.
Under the more progressive property tax structure from the start of this year, the AV exemption threshold was raised from $6,000 to $8,000 for owner-occupied homes. This means that property owners who live in their homes will not have to pay property tax on the first $8,000 of the AVs of their properties.
Owner-occupiers of one- and two-room flats will continue to be exempt from property taxes next year. HDB flats which are vacant or not occupied by their owners will be taxed at a higher rate of 10 per cent of their AVs.
Cab driver Dickson Kwok, who lives in a three-room Toa Payoh flat with his 72-year-old mother, said the tax savings will help supplement his monthly income of about $1,800.
The 44-year-old bachelor said: "It may not be a lot of money, but $54 can buy three days of meals for my mother and me."
The lowered AVs come amid a cooling HDB rental market.Overall prices slid by 2.1 per cent between October last year and the same month this year, according to Singapore Real Estate Exchange figures.
A five-room unit in Ang Mo Kio, for instance, had a median rental price of $2,700 in the third quarter of this year, according to HDB data, down from $2,800 in the same quarter last year.
Flat owners will receive their property tax notices and bills by the end of the year, and have to pay up by Jan 31 next year.
Industry observers said property tax for private housing could also be lowered, given the weak private rental market.