Budget 2024: Property tax changes welcomed to ease homeowners’ tax burdens 

• Lowest threshold for AV bands raised to S$12,000 from S$8,000
• Highest AV band raised to over S$140,000 from S$100,000
• PPHS (Open Market) Voucher to be offered for one year to help eligible families waiting for Build-To-Order flats to rent HDB units

CHANGES to property tax bands announced in the Budget will help ease next year’s tax burden for many homeowners who saw their bills swell unexpectedly this year. 

Property annual value (AV) bands for owner-occupied residential properties in Singapore will be revised upwards from Jan 1, 2025. As a result, homeowners can expect to pay the same or lower property tax bills, assuming no change in their properties’ AV and before any rebate.

The announcement was welcomed as a positive move, following a two-step hike in property tax rates and a jump in residential property AVs. Payable property tax is calculated based on AVs, which are revised yearly depending on the estimated annual rent if the property was rented out. 

Private residential rents climbed 41 per cent cumulatively in 2022 and 2023, lifting AVs with them.

Christine Sun, chief researcher and strategist for OrangeTee Group, said the changes are “fair and beneficial for most homeowners, especially those who are not landlords”. 

The surge in housing rents and AVs and subsequently, higher taxes, “affected many people, especially those who did not benefit from the rental hike and felt that they were being unfairly penalised”, she added. 

Wong Xian Yang, Cushman & Wakefield’s head of research for Singapore and South-east Asia, pointed out that the median AV in 2022 of non-landed private properties (including executive condominiums) was S$27,000; that of landed properties was S$39,600; and for four-room HDB flats, it was S$12,480. The figures were from the Inland Revenue Authority of Singapore.

With the revised AV bands in effect, excluding rebates, the property tax on a home with an AV of S$50,000 in 2025 would be trimmed to around S$1,720, compared to S$2,480 currently, Wong noted. 

“That said, the impact on the market is expected to be limited, with supply-demand dynamics the dominant factor for housing prices and rents,” he added.

Still, the AV adjustment is timely as rents are not expected to drop soon, and may hold at elevated levels in certain areas due to a supply squeeze, said OrangeTee’s Sun.

However, See Wei Hwa, partner for property tax and dispute resolution at KPMG Singapore, pointed out that the root cause for concern remains unaddressed.

“Property tax is a wealth tax imposed on the ownership of immovable properties. This impacts those who are asset-rich or wealthy, who may not have the cash flow or income to foot the increased property tax bill on their own, unless their illiquid property assets are liquidated,” he said.

Mogul.sg’s chief research officer Nicholas Mak noted that there was no reduction in the property tax rate for investment properties.

The adjustment is “a small form of assistance to fight the rising cost of living for middle-class homeowners”, he said.

The existing property tax regime was introduced in Budget 2022, with rates raised for owners of investment properties and higher-value owner-occupied private properties. 

The changes were expected to affect mainly the top 7 per cent of owner-occupied properties. However, the sharp rise in market rents and AVs from 2022 resulted in 13 per cent of homeowners being affected, Finance Minister Lawrence Wong noted in his Budget speech on Friday (Feb 16).

The higher AV bands “will still uphold the intent of the property tax changes, and ensure that those residing in higher-value properties continue to pay their fair share of taxes”, he explained.

PPHS (Open Market) Voucher

In the Budget statement, the government also extended support to young couples who may need a place to stay while they wait for the completion of their Build-To-Order flats.

Under the existing Parenthood Provisional Housing Scheme (PPHS), the Housing and Development Board (HDB) offers subsidised rental housing for these families.

The government will increase the supply of rental flats offered under the scheme, and also offer a PPHS (Open Market) Voucher for one year to help eligible families rent an HDB flat in the open market. The dollar amount of the voucher was not disclosed.

Mirroring the rise in rents for private housing, average monthly rents for HDB flats have risen substantially from 2021 to 2023 across all flat types. The PPHS voucher will come in handy to offset young families’ rental expenses, said Ismail Gafoor, chief executive officer of PropNex Realty.