Introduction

As part of the 2-step increase in residential property tax in Singapore announced in the Singapore Budget 2022, residential property tax rates would be increased again commencing 1 January 2024.

Property tax is calculated on a progressive scale. We set out below the residential property tax rate for owner occupied properties and non-owner-occupied properties for the years 2023 and 2024.

Owner-occupied rates

Non-Owner-Occupied Rates

A shorter way to calculate the property tax payable would be:-

Owner-occupied rates

Non-Owner-Occupied Rates

What is Annual Value

Annual Value (“AV”) of a property is computed by IRAS, being the expected gross rental income of the property if it were rented out (regardless of whether in fact the property was actually rented out). IRAS determines the AV by looking at the market rental of similar properties, excluding furniture, furnishings, and maintenance fees. The actual rental income received by the owner of the property is not taken into consideration.

The amount of property tax payable by a Singaporean Citizen, a Singaporean Permanent Resident, and a Foreigner do not differ. Further, actual rental income received is not a consideration in assessing the amount of property tax payable as property tax is a wealth tax. Rental income is taxed separately as income.

Comparison of Property Tax payable

For illustration, looking at residential properties only and applying the information above,

Property Tax rebate in 2024

To help owners with the increase in property tax in 2024, IRAS had announced on 30 November 2023 that owner-occupied properties will enjoy the following rebates for 2024:-

Hence, taking into account the rebates,

When Does Owner-Occupier’s Tax Rate apply?

An individual or a married couple must own and reside in the residential property to qualify for owner-occupier tax rates. If you are a married couple that owns 2 homes, the concession can only be applied to 1 home. Despite both homes being occupied, the concession can only be applied to one of the homes regardless of whether it is owned jointly or separately by the spouses.

The owner-occupier tax rates are not applicable under any of these circumstances: –

1. The property has been wholly rented out.
2. The property has been sold.
3. The property is owned by a company, trust, association or a body of persons; and
4. The property is a commercial or industrial building or land.
5. The property is vacant.
6. The property is held under trust and the trustee is not residing in the property

Please see the illustrations below to better understand the possible scenarios on owner-occupier tax rates.

 Scenario 1: Owning More Than 1 Home

If you own a private property or HDB flat (A) and recently purchased another private property (B), you can apply for the owner-occupier tax rates for property (B) if you are residing in it. The concession on property (A) will cease from the date you start enjoying the owner-occupier tax rates on property (B).

 Scenario 2: Owning A Property With A Non-Spouse

If you jointly own 2 residential properties (A and B) with another party other than your spouse (e.g. parents, siblings, etc.), you can apply for concession for each of the property.

Example: If you occupy residential property (A) and your parents occupy residential property (B), you can apply for the owner-occupier tax rates for property (A) and your parents can apply for the concession for property (B).

 Scenario 3: Renting Part Of Your Home

If you partially let out your home while still living in it, you are still eligible for the owner-occupier tax rates.

 Scenario 4: Deceased Owner

The owner-occupier tax rates apply only when the owner owns and lives in the residential property.

When the owner passes away, the Legal personal representative should complete the legal transfer of the property to the beneficiaries as soon as possible. Owner-occupier tax rates may then apply, depending on the new ownership structure.

When the owner of a residential property that qualifies for owner-occupier tax rates passes away, IRAS will continue to apply the concession for up to 2 years from the owner’s passing or the date of transfer of the property, whichever is earlier. The tax rates will only be adjusted to higher non-owner-occupier tax rates if the property remains to be held by the estate of the deceased person. This automatic extension of the concessionary tax rates is to allow some time for the property transfer arrangements to be made. Once the property transfer arrangements are completed, if the new owner moves in to reside in the property, he/she can then apply for the owner-occupier tax rates from the date of occupation.

If the property is legally constrained from being transferred to the beneficiaries (e.g. the beneficiary is below the legal age of 21), you can submit an appeal via email with this template for the owner-occupier tax rates to continue to apply to the property. Beneficiaries have to be residing in the property and not be enjoying owner-occupier tax rates on another property to qualify for the concession.

 Scenario 5: Properties Held in Trust

If you are holding the property in trust, you (trustee) are updated as the owner in the Valuation List for property tax purpose. The owner-occupier tax rates will not be applicable if the owner (who is entered in the Valuation List) is not residing in the property.

Conclusion

Overall, when purchasing a property, it is important to consider these longer-term factors that relate to recurring costs. While additional fees like stamp duties are initial hurdles to consider, the impact of property taxes may limit your ability to renovate or upgrade your property. As always, we recommend taking all these factors into consideration when deciding whether to purchase a second property or when deciding which property should be listed as owner-occupied to optimise your property taxes.

In light of the above information, it is therefore essential that you speak to your lawyers before considering any acquisition of property or properties in Singapore to avoid any uncertainty in terms of Property Tax. Here at Sim Mong Teck & Partners, our experienced conveyancing team have a wealth of experience and knowledge on property related matters. This allows us to provide you with sound and practical advice on your queries.

Should you have any questions pertaining to your property or other conveyancing matters, please reach out to our lawyers or Business Development team.