Taxing problems and suboptimal outcomes

THE majority of Singapore households pay little by way of property taxes, as they reside in public housing which draws a low tax rate. But homeowners living in private property and/or holding properties for investment will be hit hard next year by the double blow of sharply higher property tax rates for higher-value properties and elevated property values. 

The property tax rate hikes, rolled out in two stages, were announced at Budget 2022 and are a form of progressive wealth tax in Singapore. Taxes are computed based on the annual value of a property. Come Jan 1, annual values will go up in their yearly revision. That they will be pulled up should come as no surprise, given that AVs are based on the rental value of one’s residential property. Rents of both private and public housing have surged and are only just starting to slow down.

A one-off rebate will be handed out to take the edge off the tax spike. While HDB homeowners will - rightly - have up to 100 per cent of their property tax burden covered by the rebate, private homeowners who are owner-occupiers will get a 15 per cent rebate, and those who own homes for rental get no rebate. Jessie Lim talks to analysts to gauge impact on market behaviour.