Rebate To Offset HDB Property Tax Rise In Singapore

by Mary Swire, Tax-News.com, Hong Kong

20 November 2009

The Inland Revenue Authority of Singapore (IRAS) is to raise the annual values (AV) of all Housing and Development Board (HDB) flats with effect from January 1, 2010. To help owner-occupiers of those flats to adjust to that increase, the government will grant them a one-off property tax rebate for their property tax payable in 2010.

Property tax is charged on the ownership of all types of property in Singapore. The amount of tax paid is a percentage of the property's AV, which is the estimated yearly rent the property could fetch if it were rented out. The current tax rate for owner-occupied residential property is 4% per year; the tax rate for all other properties is 10%.

IRAS reviews the AV of all properties, including HDB flats, annually to ensure that they reflect prevailing market rental values for the purpose of determining property tax. The last AV revision for HDB flats was, however, done two years ago on January 1, 2008, based on rental values in 2007.

AVs for HDB flats were not revised on January 1, 2009, despite the fact that HDB rentals had increased significantly (by between 31% and 37%) in 2008 relative to 2007, because of the uncertainty in market rental trends in the economic recession.

However, current values of HDB rentals, as well as HDB resale prices, are still significantly higher than levels observed in 2007, and IRAS will therefore revise the AV of all HDB flat types with effect from January 1, 2010.

There are two existing property tax rebates: the SGD100 (USD72) rebate, and the 40% rebate, which were provided as part of 2007 and 2009 budgets, respectively. Both scheduled to expire in 2009.

Therefore, to help HDB homeowners adjust to the January 2010 AV increase, the government will grant a new tax rebate to all HDB owner-occupiers for property tax payable in 2010, after deducting the 1994 goods and services tax (GST) rebate which is still available to all residential property owner-occupiers. The rebate will be the lower of SGD50 or the actual property tax amount, and will be capped at SGD120.

With the new property tax rebate and the 1994 GST rebate, all one- and two-room HDB owner-occupiers will continue to pay zero property tax in 2010. For average three- and four-room HDB owner-occupiers, the increase in property tax in 2010, after deducting the special rebates, will be SGD72 and SGD97 respectively, for the year as a whole. For five-room HDB owner-occupiers, the average tax increase will be SGD107 for the year as a whole, and for Executive HDB owner-occupiers, SGD103.

Recommended