Taxing our love of property

I KNOW I am in good company when I say we Singaporeans love owning property. But, December 2023 was a time for reflection for many when property tax bills were issued. For those who have the good fortune of owning property, did you take a look at your latest property tax bill? Did you take a close look? And relooked? Yes, it did go up. For some, it increased by a bit. For some others, it nearly doubled.

Let’s break down the causes of the hike in the fateful tax bill. First, this is due to the increase in the property’s annual value (AV), which reflects the increased (hypothetical) market rental value. This should be a good thing for owners. Second, the rise in the tax bill is also due to the increase in the property tax rates and the change in the banding of the annual value. The combined forces of both effectively increased overall property tax rates.

For example, from 2015 to 2022, the first S$55,000 of AV attracted a property tax of S$1,880 or an effective rate of 3.4 per cent. In 2023, it rose to S$2,430 or 4.4 per cent, and it rose again to S$2,980 or 5.4 per cent this year. Looking at this uptrend, should those who’re paying more property tax count themselves privileged or the opposite?