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Singapore

Lower taxes for 95% of owner-occupied homes next year

All HDB flats, three quarters of private homes that are owner occupied will pay less under new Progressive Property Tax Rates announced in Budget 2014


SINGAPORE — Most owner-occupied homes will pay lower property tax bills next year as a result of the Progressive Property Tax Rates, the Inland Revenue Authority of Singapore (IRAS) announced today (Nov 26).

All owner-occupied HDB flats and three quarters of private homes that are not rented out will pay lower property tax in 2014. In total, 95 per cent of owner-occupied homes will see lower property tax bills.

Taking into account non-owner-occupied homes, 80 per cent of all homes will pay lower property tax in 2014.

The new Progressive Property Tax Rates for owner-occupied residential properties, which were announced in Budget 2013, will take effect from Jan 1.

With the new property tax structure, the Annual Value (AV) exemption threshold for which no tax applies has been raised from S$6,000 to S$8,000. This means that property owners who live in their homes will not have to pay property tax on the first S$8,000 of the AVs of their properties.

The new property tax structure also increases the progressivity of the property tax structure by taxing properties with higher AVs more.

IRAS reviews the AVs of all properties annually. The AV of a property is based on the estimated annual market rent of the property if it was to be let out, and is used as a basis to compute the property tax payable.

The market rents of three- to five-room HDB flats have increased by about 3 per cent since the last AV revision on Jan 1 this year and the values will be these flats will be revised from Jan 1, 2014.

There will be no change to the AVs of the rest of the HDB flats as their market rents have remained largely the same since the last AV revision.

Taking into account their AVs and the new property tax rates, all one- and two-room HDB owner-occupiers will continue to pay no property tax, as the AVs of these flats remain below S$8,000.

The rest of HDB owner-occupiers will enjoy property tax savings ranging from S$28 to S$40 in 2014.

The market rents and hence AVs of 70 per cent of private residential properties over the past year have remained largely the same since the last AV revision, with the remaining 30 per cent seeing an increase in AV.

Taking into account their AVs and the new property tax structure, 74 per cent of private owner-occupiers will also pay less tax after applying the new tax rates on their 2014 AVs.

Under the new property tax structure, the property tax rates for non-owner-occupied residential properties with AV above S$30,000 will be increased from Jan 1, based on a progressive schedule.