Annual values, which are used to compute property taxes, will be revised upwards for most residential properties from Jan 1, 2023 (Picture: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - Property taxes will go up in 2023, with an upward revision of annual values for most residential properties. A property’s annual value, which is used to compute property tax payable by the property owner, is defined by the Inland Revenue Authority of Singapore (IRAS) as the estimated gross annual rent of the property, assuming the property is rented out.
A Dec 2 media release by the Ministry of Finance (MOF) and IRAS states that annual values for most residential properties, including private property and HDB flats, will be revised from Jan 1, 2023. The revision is part of IRAS’s annual review and reflects the rise in market rents. “Since the last revision of annual values on Jan 1, 2022, market rents of HDB flats and private residential properties have risen by more than 20%,” the release adds.
In the same statement, MOF and IRAS announced the provision of a one-off property tax rebate in 2023 of up to $60 for owner-occupied homes. The rebate is equivalent to 60% of the 2023 property tax bill and will be automatically offset against any property tax payable in 2023.
For HDB flats, owner-occupiers of one- and two-room flats will continue to pay no property tax in 2023 as their revised annual values remain below $8,000. Nicholas Mak, head of research and consultancy at ERA Singapore, says that of the 1.033 million existing HDB flats owned by individual owners, one- and two-room flats make up roughly 4%, which means that the majority of HDB flat owners will be impacted by the higher property tax payable from 2023 onwards. (Find HDB flats for rent or sale with our Singapore HDB directory)
He believes the property tax increase for owner-occupied HDB flats will be “manageable” for many flat owners, noting that the property tax for the biggest flats available (executive flats) will increase by a quantum ranging between $55.20 to $67.20 in 2023.
Meanwhile, Tricia Song, CBRE’s head of research, Southeast Asia, says that the higher annual values follow an increase in property tax rates unveiled in February as part of the Budget 2022 announcement. The increase, which will take place in two steps starting from 2023, is expected to largely impact higher-end properties with annual values exceeding $60,000. “With this increase in tax rates and annual values, it will further cream off the rental gains so far for investors or non-occupier homeowners," she says.
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For non-owner-occupied residential properties, which includes investment properties, property tax rates will be increased from 10% to 20% currently, to 11% to 27% in 2023, and 12% to 36% in 2024. For owner-occupied residential properties, the property tax rates will be increased from 4% to 16% currently, to 5% to 23% in 2023, and 6% to 32% in 2024. This increase applies only to the portion of the annual value of more than $30,000.
Considering the revised property tax rates and assuming a 20% increase in annual values, CBRE’s Song estimates that properties with current annual values of $30,000 (prior to the upward revision of annual values) will see property taxes increase by $1,260 or 42% in 2023. For properties with current annual values of $60,000, property taxes are expected to increase by $5,190, or 75.2% in 2023. For properties with current annual values of $90,000, property taxes are estimated to increase by $9,810 or 81.8% in 2023.
ERA’s Mak believes that some landlords that are renewing rental leases may take the opportunity to increase rents but cautions against excessive jumps. “Many tenants are already feeling the pain from rising rentals over the past 1.5 years.”