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Increase in annual value of homes
Increase in annual value of homes 新加坡
By   Internet
  • 城市報
  • Annual Residential Value
  • Property Land Tax
  • Property Policy
Abstract: The increase in the Annual Domestic Value (ADV) from January next year will result in an increase in the amount of property tax that homeowners have to pay. Most owner-occupiers of HDB flats will have to pay an additional $30 to $70 in property tax next year, after deducting the 60 per cent one-off rebate of up to $60 granted by the government.

The Ministry of Finance and the Inland Revenue Department announced in a joint statement on Friday (December 2) that the annual value of most homes, including private homes and HDB flats, will be increased from January 1 next year to reflect the rise in the rental market.

 

The authorities also announced that all owner-occupied properties will be eligible for a 60% one-off property tax rebate of up to $60 next year. The announcement points out that rents for HDB and private housing have risen by more than 20 per cent since the last round of annual residential value adjustments in January this year.

 

The Inland Revenue Department (IRD) reviews the annual value of a home each year for the purpose of calculating property tax.

 

The annual value refers to the estimated annual rental value of a rental property, which is estimated from the market rent of similar properties.

 

One- and two-bedroom HDB flats will continue to be exempt from property tax next year as their annual value will remain below $8,000, while larger HDB flats will be subject to higher property tax.

 

For three-bedroom HDB flats, the rebate will cost owner-occupiers between $20.80 and $40 in property tax next year, $7.20 to $30.40 more than this year.

 

As for the largest HDB flats, owner-occupiers will have to pay between $176.80 and $224.80, which is $55.20 to $67.20 more than this year. The government announced in this year's Budget that property tax will be increased over two years starting next year, with the most significant adjustment being made to high-end private homes.

 

The marginal tax rate for the annual value portion of owner-occupied properties above $100,000 will be 23% next year, rising to 32% the year after; the marginal tax rate for the annual value portion of non-owner-occupied properties above $60,000 will be 27% next year, rising to 36% the year after.

 

According to estimates by CBRE's head of research for South East Asia, Song Mingwei, if the annual value of a house were to rise by an average of 20 per cent next year, the current annual value of a $30,000 house would rise to $36,000 and property taxes would increase by 42 per cent, equivalent to $1,260.

 

She noted that this would erode the profits that investors and non-owner occupiers make from renting out their homes.

 

ERA's head of industry research and consultancy, John Mak, said that with the latest adjustment, the annual property tax on a three-bedroom mass and mid-range private home would increase by about $1,200, and that some landlords who were about to renew their leases might take the opportunity to raise their rents, which would amount to a $100 monthly hike.

 

Many tenants have already been suffering from rent increases over the past year and a half and it is important that landlords do not get too greedy and kill the goose that lays the golden eggs, he said.

According to Savills senior director of research and consultancy, Cheung Man-cheung, some owner-occupiers may be renting out rooms to help cover expenses as interest rates continue to rise and the economy slows.

 

In addition, high rents, which have been hitting record highs, will form the basis for future rent and annual value calculations, which in turn will affect property tax changes.

 

Ismail Gafoor, president of Bona Real Estate, believes that the property tax increase is still manageable, as the increase in rents will more than offset the tax increase.

 

Landlords who signed long leases with tenants before the rent increase may not benefit from the increase and will therefore be most affected by the annual value increase.

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Increase in annual value of homes
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