First, let's explain the concept of "annual value", which is defined by the Inland Revenue Authority of Singapore as follows:
"Estimated gross annual rent of the property if it were to be rented out, excluding furniture, furnishings and maintenance fees."
Translated, this means that the annual value is approximately equal to = the annual rent after deduction of furnishings, furniture and property fees.
For example, if the monthly rent of a property in the market is $5,000, then the gross estimate of the monthly rent excluding furniture, furnishings and maintenance fees is about $4,000, and the annual value = $4,000*12=$48,000. this is of course a gross estimate, to check the annual value data, you have to spend $2.50 to check the following government website.
In addition, Singapore property tax has two features, one is the graduated tax rate and the other is the owner-occupied discount.
Graduated Tax Rate
As the name implies, the higher the annual value, the higher the tax rate. For example, the tax rate for owner-occupied houses in 2023 is less than 4% for a house with an annual value of S$30,000, and about 23% for a house with an annual value of over S$100,000, a figure that will increase to 32% after 2024.
Self-occupied benefits
For homes bought for self-occupation, the tax rate range is 4% to 32%; for homes bought for investment, or vacant, the tax rate range is 12% to 36%. For luxury properties, the tax rates for owner-occupied and investment properties are actually very similar.
Another major point to note is that if two people have two suites, in any case, only one set can enjoy the owner-occupied discount, and the other set has to be counted for investment tax rate.
For non-residential properties, such as commercial buildings, store houses, industrial plants, whether for self-use or for rent, the tax rate is fixed at 10%, and the calculation method is also = "annual value" * "tax rate".
Lastly, the annual value of the property is fluctuating in the taxation letter sent by the government every year, especially in recent years, the annual value has been adjusted upward quite a lot, so as a homeowner, should you be happy or should you be unhappy?
