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11 Facts on Property Tax in Singapore


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Property Tax


Introduction

At the start of every year, Singapore property owners are mandated to pay their property tax to the Island Revenue Authority of Singapore (IRAS). Yet, many property owners are not well-informed of the computation of property tax as well as whether they are even required to pay for it. In this article, we will be focusing on the 11 things you need to know for property tax on HDB flats.


#1 Property Tax Computation

Property tax calculations on owner occupied and non-owner occupied are based on a progressive range. NOTE: Owner occupied tax rate is lower than non-owner occupied tax rates.


#2 Property Tax Computation Formula

Property tax is computed by multiplying the annual value of the property with the applicable property tax rates.

Property Tax = Tax Rate x Annual Value


#3 Annual Value (AV)

The annual value is the value of the estimated gross rental amount a property can fetch in 1 year if it is to be leased out. The value is attained based on the market rentals of similar properties nearby. Residential properties like HDB flats with an annual value of $8,000 or below need not pay property tax. For more information on annual value, please click here.


#4 Owner-Occupied Tax Rate

Owner-occupied tax rates apply when the owner occupies the residential property and enjoys owner-occupied tax rates as shown below. NOTE: The owner-occupied rates are applicable only to single property ownership by an individual or a married couple. Hence, a married couple who is living separately can enjoy owner-occupied rates on one property only.


Owner-occupied tax rates are not applicable to the situations below:

  • The property has been transacted
  • The property is owned by a business entity, investment body or association
  • The whole property is leased or left vacant (No vacancy refund with effect from 1st January 2014)

owner occupied tax rate table

Table for Owner-Occupied Tax Rates


#5 Non-owner Occupied Tax Rate

Non-owner occupied tax rates apply when the owner does not occupy the residential property and does not enjoy the owner-occupied progressive tax rates such as wholly renting out the property. NOTE: If you are renting out partially and living in the property, you are still able to enjoy owner-occupied tax rates.


non owner occupied tax rate table

Table for Non-Owner-Occupied Tax Rates


#6 Automatic Inclusion of Owner-occupied Tax Rates

For the ease of administrative procedure, owner-occupied tax rates are automatically applied when you buy any HDB flats, DBSS and new EC. You must notify IRAS if you have no intention to live in the property to avoid penalties. In other non-standard cases, you will need to inform IRAS to apply for owner occupied tax rate.

To check whether you are enjoying owner-occupied tax rates, you can use the e-Service on IRAS website and select 'property'. You may also apply for owner-occupied tax rates at the same website if you realize that you are taxed according to residential tax rates even though you live in the property.


#7 Due Date for Property Tax Payment

Property tax is reviewed yearly and paid 1 year in advance by 31st January every year. For example, you will pay property tax for your property for the year of 2016 by 31 January 2016. If you opt for GIRO, property tax will be deducted from your account every month accordingly.


#8 Outstanding Property Tax

Since the owner paid the property tax in advance for the year ahead, the next buyer will reimburse the seller the balance in cash (CPF not allowed to pay for property tax) for the remaining period of the year. For specific calculations, the seller will bear the property tax up to the completion date (2nd Appointment), including the completion date itself. The buyer will bear the pro-rated property tax starting from 1 day after the completion date. NOTE: Property tax is bound to the property, not the owners. Buyers will pick up any outstanding property tax of the sellers if their lawyers or they did not check if seller owes any property tax. However, for a HDB transaction, the HDB officer will check and ensure the right party pays the right amount of property tax on 2nd Appointment. During a Temporary Extension of Stay, the new owners (buyer) will bear the property tax at non-owner occupier tax rate as it is after the completion date.


#9 Who Pays property Tax

All names on the valuation list, owners, joint owners, Power of Attorney and trustee will be required to pay property tax. Therefore, we can see that beneficiaries need not pay property tax. Property tax is paid to the Comptroller of Property Tax.


#10 What is subjected to Property Tax?

Real properties, immovable properties, fixtures, properties under construction are subject to property tax. On the other hand, movable items like fittings are not subjected to property tax and are taxed differently. For a guide in classifying fixture and fitting, please click here for fixtures and here for fittings.


#11 Property Tax Notification

It is the obligation of the owner (or the new owner) to notify the Property Tax Department on any of the changes on ownership and status of the property as different rates may apply. Please do take note to avoid attracting penalties. The following table shows the timeframe to inform Property Tax Department.


property tax notification

Property Tax Notification


While the process of changing from owner occupied tax rate to non-owner occupied tax rate is automatic, you are still advised to inform IRAS and Property Tax Department on the changes. To change your tax rate from non-owner occupied to owner occupied, you will need to inform IRAS and Property Tax Department as well because the process is not automatic.



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Property Tax


Introduction

At the start of every year, Singapore property owners are mandated to pay their property tax to the Island Revenue Authority of Singapore (IRAS). Yet, many property owners are not well-informed of the computation of property tax as well as whether they are even required to pay for it. In this article, we will be focusing on the property tax on HDB flats.


Property Tax Computation

Property tax calculations on owner occupied and non-owner occupied are based on a progressive range. NOTE: Owner occupied tax rate is lower than non-owner occupied tax rates.


Property Tax Computation Formula

Property tax is computed by multiplying the annual value of the property with the applicable property tax rates.

Property Tax = Tax Rate x Annual Value


Annual Value (AV)

The annual value is the value of the estimated gross rental amount a property can fetch in 1 year if it is to be leased out. The value is attained based on the market rentals of similar properties nearby. Residential properties like HDB flats with an annual value of $8,000 or below need not pay property tax. For more information on annual value, please click here.


Owner-Occupied Tax Rate

Owner-occupied tax rates apply when the owner occupies the residential property and enjoys owner-occupied tax rates as shown below. NOTE: The owner-occupied rates are applicable only to single property ownership by an individual or a married couple. Hence, a married couple who is living separately can enjoy owner-occupied rates on one property only.

Owner-occupied tax rates are not applicable to the situations below:


  • The property has been transacted
  • The property is owned by a business entity, investment body or association
  • The whole property is leased or left vacant (No vacancy refund with effect from 1st January 2014)

owner occupied tax rate table

Table for Owner-Occupied Tax Rates


Non-owner Occupied Tax Rate

Non-owner occupied tax rates apply when the owner does not occupy the residential property and does not enjoy the owner-occupied progressive tax rates such as wholly renting out the property. NOTE: If you are renting out partially and living in the property, you are still able to enjoy owner-occupied tax rates.


non owner occupied tax rate table

Table for Non-Owner-Occupied Tax Rates


Automatic Inclusion of Owner-occupied Tax Rates

For the ease of administrative procedure, owner-occupied tax rates are automatically applied when you buy any HDB flats, DBSS and new EC. You must notify IRAS if you have no intention to live in the property to avoid penalties. In other non-standard cases, you will need to inform IRAS to apply for owner occupied tax rate.

To check whether you are enjoying owner-occupied tax rates, you can use the e-Service on IRAS website and select 'property'. You may also apply for owner-occupied tax rates at the same website if you realize that you are taxed according to residential tax rates even though you live in the property.


Due Date for Property Tax Payment

Property tax is reviewed yearly and paid 1 year in advance by 31st January every year. For example, you will pay property tax for your property for the year of 2016 by 31 January 2016. If you opt for GIRO, property tax will be deducted from your account every month accordingly.


Outstanding Property Tax

Since the owner paid the property tax in advance for the year ahead, the next buyer will reimburse the seller the balance in cash (CPF not allowed to pay for property tax) for the remaining period of the year. For specific calculations, the seller will bear the property tax up to the completion date (2nd Appointment), including the completion date itself. The buyer will bear the pro-rated property tax starting from 1 day after the completion date. NOTE: Property tax is bound to the property, not the owners. Buyers will pick up any outstanding property tax of the sellers if their lawyers or they did not check if seller owes any property tax. However, for a HDB transaction, the HDB officer will check and ensure the right party pays the right amount of property tax on 2nd Appointment. During a Temporary Extension of Stay, the new owners (buyer) will bear the property tax at non-owner occupier tax rate as it is after the completion date.


Who Pays property Tax

All names on the valuation list, owners, joint owners, Power of Attorney and trustee will be required to pay property tax. Therefore, we can see that beneficiaries need not pay property tax. Property tax is paid to the Comptroller of Property Tax.

Another interesting fact is that any lessees who has taken more than 3 years lease with the government or any public authorities is defined as the owner according to the Property Tax Act. If you have wondered why you have to pay property tax when you are referred as HDB lessee legally and HDB is the real owner that is the reason why. When we purchase a flat with 99 years lease, we are actually leasing the flat from HDB for 99 years, and we are referred as HDB owners since the lease is more than 3 years.

The correct term is that we lease a flat from HDB for 99 years and we are considered a HDB lessee, and we further rent out to subtenants. The commonly used term in our everyday lives is that we buy a flat from HDB and will return the flat to HDB after 99 years, and we are considered HDB owners, and we rent out to tenants. Whichever terms we use, as long as the common people can understand it, both terms can be used. However, it is still important to know our legal position and HDB has reversionary interest in the HDB flats.

Extreme cases like buying a flat with less than 3 years of lease left with HDB using full cash is very rare. And it may not have happened before due to the ineligibility and irrationality. However, if that is the case, then the owner may not be taxed as he will not be considered a owner under the Property Tax Act.


What is subjected to Property Tax?

Real properties, immovable properties, fixtures, properties under construction are subject to property tax. On the other hand, movable items like fittings are not subjected to property tax and are taxed differently. For a guide in classifying fixture and fitting, please click here for fixtures and here for fittings.


Property Tax Notification

It is the obligation of the owner (or the new owner) to notify the Property Tax Department on any of the changes on ownership and status of the property as different rates may apply. Please do take note to avoid attracting penalties. The following table shows the timeframe to inform Property Tax Department.


property tax notification

Property Tax Notification


While the process of changing from owner occupied tax rate to non-owner occupied tax rate is automatic, you are still advised to inform IRAS and Property Tax Department on the changes. To change your tax rate from non-owner occupied to owner occupied, you will need to inform IRAS and Property Tax Department as well because the process is not automatic.


Some Common Cases

Case 1: Own a HDB flat, and purchased a private property recently.
If owner is now living in the private property, owner can apply for owner occupier tax rate for private property and the HDB flat will be taxed under non-occupier tax rate.
If a married couple owns the HDB flat and private property but decided to occupy 2 homes, only 1 property can enjoy owner occupied tax rate.
If each party in a married couple owns a residential property separately, only 1 of the properties can enjoy owner occupier tax rate.

Case 2: Own a HDB flat with spouse, and another private property with non-spouse (eg parents, siblings etc)
Both residential properties can enjoy owner occupier tax rate
Owner can apply for owner occupier tax rate with spouse for HDB flat (if they stay there)
Non-spouse can apply for owner occupier tax rate for private property (if they stay there)
Spouse cannot enjoy a separate owner occupier tax rate for another residential property
Non-spouse cannot enjoy a separate owner occupier tax rate for another residential property

Case 3: Husband and wife own the HDB flat, wife own private property. Wife staying with mother, mother is not owner of private property
Only 1 residential property can enjoy owner occupier tax rate

Case 4: A Muslim husband has 4 wives. Each wife owns a HDB flat with the husband
A Muslim husband with 4 wives can co-own 4 different HDB flats with his wives
All 4 HDB flats can enjoy owner occupier tax rate (each wife is staying at their respective HDB flats)



Date first posted on 18 June 2019; Last Edited on 18 June 2019

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