Property Annual Value Changes (Budget 2024): Higher annual value bandings, 24-month instalment plan
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Singapore's property Annual Value (AV) bands for owner-occupied residential property tax rates will be revised from January 2025, and homeowners can expect to pay the same or lower property tax bills as a result.
Annual Value Changes Budget 2024
Announcing the change in his Budget 2024 speech on Friday (Feb 16, 2024), DPM Lawrence Wong noted that a 2-step increase in property tax rates was announced in Budget 2022 as a wealth tax, targeting all investment properties and higher-end owner-occupied private properties.
Hot property market pushed up property Annual Values
But since 2022, market rents have increased significantly due to the combination of strong demand and COVID-related supply constraints, subsequently pushing up AVs.
Meant to target wealthier property owners
While the property tax rate increases were originally expected to mainly target the top 7% of owner-occupied residential properties, the increase in value has resulted in the proportion of affected properties nearly doubling, to 13%.
Annual Value
What is annual value in Singapore?
In Singapore, the Annual Value (AV) is a key factor in determining property tax. The Annual Value represents the estimated annual rent that a property could fetch if it were to be rented out. It is not the actual rent paid by the property owner but a valuation assessed by the Inland Revenue Authority of Singapore (IRAS).
The property tax payable is, therefore, calculated based on the Annual Value of the property. The tax rate depends on the property type, with different rates for residential, commercial, and industrial properties. Singapore uses a progressive tax rate system for residential properties, where the tax rate increases as the Annual Value of the property rises.
Property owners in Singapore receive a Property Tax Notice from the IRAS, specifying the Annual Value and the amount of property tax due. It's important for property owners to be aware of their property's Annual Value and the associated property tax obligations to ensure compliance with Singapore's tax regulations.
| 1 Jan - 31 Jan 2024 | From 1 Jan 2025 | |
|---|---|---|
| Marginal Property Tax Rate | Annual Value | Annual Value Portion ($) |
| 0% | $0 - $8,000 | $0 - $12,000 |
| 4% | >$8,000 - $30,000 | >$12,000 - $40,000 |
| 6% | >$30,000 - $40,000 | >$40,000 - $50,000 |
| 10% | >$40,000 - $55,000 | >$50,000 - $75,000 |
| 14% | >$55,000 - $70,000 | >$75,000 - $85,000 |
| 20% | >$70,000 - $85,000 | >$85,000 - $100,000 |
| 26% | >$85,000 - $100,000 | >$100,000 - $140,000 |
| 32% | >$100,000 | >$140,000 |
*Changes to Annual Value bands for owner-occupied residential property tax rates starting from 1 January 2025 as presented by DPM Lawrence Wong in the Budget 2024.
Property Annual Value (Current)
Currently, property tax is charged according to Annual Value (AV) bands from S$8,000 to S$100,000.
Property Annual Value 2025 (Changes)
From 1 January 2025, the lower threshold will be raised to S$12,000 from S$8,000, while the higher threshold will be raised to over S$140,000, from over S$100,000. Corresponding adjustments will be made to bands in between.
As a result, homeowners can expect to pay the same or lower property tax bills at each of the band levels, assuming there is no change in their properties’ AVs and before any rebate, said Wong.
“This will still uphold the intent of the property tax changes, and ensure that those residing in high-value properties continue to pay their fair share of taxes,” he added.
Wong noted that the government had provided a rebate to cushion the impact of the property tax changes this year. The government will continue to monitor the property market and provide another rebate in 2025, if needed.
IRAS Property Tax Instalment
24 Month instalment interest-free plan for retirees
He also pointed out that there may be retirees living in higher-end residential homes who face cash flow issues when paying their tax bills.
For these retirees, the Inland Revenue Authority of Singapore (IRAS) will offer a 24-month instalment plan without any interest. They can apply for the plan via IRAS’ website, or contact IRAS for more details.
Read more property updates from the Budget 2024 - Additional Buyer's Stamp Duty refund now extended to single seniors aged 55 and above, and families waiting for their HDB BTO flats are now eligible for a 1-year HDB PPHS rental voucher in the open market.
Part of this article was first published in The Business Times.