Revised Property Tax Bands to Benefit Homeowners
In the latest Budget announcement, Finance Minister Lawrence Wong revealed that annual value (AV) bands for owner-occupied residential property tax rates will undergo revision starting January 2025. The adjustment aims to provide homeowners with the prospect of either maintaining or reducing their property tax bills, assuming no alteration in their properties’ AVs and before any applicable rebate.
Initially introduced in Budget 2022, a two-step increase in property tax rates was positioned as a wealth tax, targeting investment properties and higher-end owner-occupied private properties. However, the surge in market rents since 2022, fueled by robust demand and Covid-related supply constraints, has led to a significant increase in AVs, influencing property tax payable calculations.
Originally designed to impact the top 7% of owner-occupied residential properties, the spike in AVs has widened the scope, now affecting 13% of such properties. The current property tax is based on AV bands ranging from S$8,000 to S$100,000.
As part of the adjustment, the lower threshold will be raised to S$12,000 from S$8,000, and the higher threshold will extend to over S$140,000 from over S$100,000. Corresponding adjustments will be made to bands in between. Homeowners can anticipate maintaining or reducing property tax bills at each band level, assuming no AV changes and before any rebate.
Minister Wong emphasized that this revision aligns with the original intent of property tax changes, ensuring that those residing in high-value properties contribute their fair share of taxes.
Acknowledging potential challenges for retirees in higher-end residential homes facing cash flow issues with tax payments, Wong highlighted a solution. The Inland Revenue Authority of Singapore (IRAS) will introduce a 24-month instalment plan without interest for these retirees. Interested individuals can apply for the plan via the IRAS website or contact IRAS directly for further details.
Wong assured ongoing government monitoring of the property market, with a commitment to providing another rebate in 2025 if deemed necessary.
