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Almost all private homeowners to pay lower or same taxes in '17

Iras also says HDB flat owners will pay lower or no property taxes next year
Tuesday, November 29, 2016 - 05:50
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Analysts say the decline in annual values and tax payable by homeowners reflects "the slower economy and rental market".

Singapore

ALMOST all private residential property owners will pay lower or same property taxes in 2017 compared to a year ago, the Inland Revenue Authority of Singapore (Iras) said on Monday.

As for HDB flat owners, they will pay lower or no property taxes next year, details from Iras show.

This reflects a decline in annual values (AVs) of the properties that Iras uses to compute property tax. The tax authority reviews the AVs of properties every year to ensure that they reflect prevailing market rentals.

In response to BT queries, Iras confirmed that about 51 per cent of private residential properties will see a reduction in AVs of about 8.5 per cent on average. The remaining private residential properties will mainly see no change in AVs, with less than one per cent seeing increases in AVs.

As for HDB flats, the average AV decrease is 5.8 per cent for three-room flats; 4.7 per cent for four-room flats; 4.9 per cent for five-room flats; and 4.7 per cent for executive flats.

Savills research head Alan Cheong noted that the decline in annual values and tax payable by homeowners is "a reflection of the slower economy and rental market".

But Mr Cheong flagged that anecdotally, rents have fallen much more for private homes and it is in this private housing segment where "stresses are building up". Close to half of private residential properties are not seeing a change in AVs probably due to ongoing leases that have not been renewed yet at lower market rents, he said.

Property tax is computed by multiplying the AV of the property with the relevant set of progressive property tax rates for residential properties. As a tax on property ownership, it is payable on all properties regardless of whether the property is rented out, owner-occupied, or left vacant.

The concessionary "owner-occupier residential tax rates" are applied on owner-occupied residential properties, while the "residential tax rates" are applied on non-owner-occupied properties.

For private residential properties, the progressive tax rates remain up to 16 per cent for owner-occupied properties and up to 20 per cent for non-owner occupied properties. The applicable tax rates for HDB flats are still up to 4 per cent for owner-occupied flats and 10 per cent for non-owner occupied flats.

Based on the announced property tax payable across flat types, HDB flat owners could enjoy estimated tax savings of 13.1 to 51 per cent.

Owner-occupiers of one- and two-room HDB flats continue to be exempt from property tax, while three-room flat owners will pay up to S$18.40. This year, three-room flat owners paid up to S$37.60 in property tax, while they paid up to S$49.60 in 2015.

For next year, four-room flat owners pay between S$52 and S$100, down from this year's S$71.20 to S$119.20. Five-room flat owners will pay S$83.20 to S$131.20 in 2017, also down from this year's S$104.80 to S$152.80.

The property tax for executive flats ranges from S$95.20 to S$143.20 next year. This year, the taxes payable were between S$116.80 and S$164.80.

Lee Nai Jia, head of South-east Asia research at Edmund Tie & Company, noted that property tax rates have tended to be sticky and that tax rate cuts, particularly for private home owners, are least likely in the progressive tax regime.

All property owners will receive their property tax bills by the end of December. These should be paid by Jan 31 next year. There will be a 5 per cent penalty imposed for property owners who fail to pay or have not arranged to pay their tax by the due date.

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