Each year on the 31st of January, property investors and homeowners in Singapore are required to pay their property tax.
However, not many property owners out there know exactly how this tax is calculated and whether or not they are liable to pay for it.
As you can imagine, proper knowledge in your tax obligations is essential in terms of budgeting and ensuring you have enough funds ready for the 31st of January.
Therefore I am writing this post to educate property owners on everything you need to know on Property Tax in Singapore.
What is Property Tax?
Property Tax is a tax levied on all property owners in Singapore and is applicable whether the property is owner-occupied, rented out, or left vacant. It is a separate tax from Income tax which is determined by the rental income derived from the leasing of the property. So if you are renting out your property, you are required to pay for BOTH Income Tax and Property Tax.
How is Property Tax Calculated?
Property Tax is determined by the Annual Value (AV) of each individual property.
You can calculate the payable property tax using this formula;
Annual Value X Property Tax Rate = Property Tax Payable
How is Annual Value calculated?
The AV is calculated by taking the monthly market rent of the unit and multiplying it by 12. This market rent is the rent after deducting reasonable rentals for furniture and maintenance fees.
For example, if Mr A rents out his private property for $4,800.
His monthly maintenance is $400 and his furniture and furnishings rental is priced at $1,400.
The market rent for his unit will be $3,000.
The AV for his unit will be $3,000 X 12 = $36,000
Basically, the Inland Revenue Authority of Singapore (IRAS) factors in the transacted rents of comparable units in the vicinity and derives a value based on the location, size, conditions and other physical attributes of the property.
Check out the Annual Value of your property by logging in with your Singpass with this link. Alternatively, you can also check if your AV values are fair by studying the rents of transacted units in your development.
Click here to check the transacted rents of private residential properties.
Click here to check the transacted rents of HDB flats.
A common misconception that property owners have is that they do not have to pay their property tax based on the AV because they are currently staying in the unit.
This is NOT true.
Regardless of whether the house is vacant, owner-occupied or rented to a tenant, the property tax is still determined by the Annual Value of the property. However it is also important to note that owner-occupied properties will pay less taxes as they fall into a different bracket. Vacant units and rented units are categorized as Non-Owner-Occupied Properties.
Non-Owner-Occupied Property (NOOP) Tax Rate
If your Property is left vacant or rented out, you can find out how much property tax are you liable for by using the table below to find out your applicable progressive tax rate.
| Annual Value (AV) | Progressive Tax Rates | Property Tax Payable |
|---|---|---|
| First $30'000 | 10% | $3'000 |
| Next $15'000 | 12% | $1'800 |
| Next $15'000 | 14% | $2'100 |
| Next $15'000 | 16% | $2'400 |
| Next $15'000 | 18% | $2'700 |
| Above $90'000 | 20% |
NOOP Case Study
Mr A rents out his unit on 1 Jan 2015 at $4,200.
The Annual Value for his property is at $36,000 ($3,000 per month).
For the first $30,000, he will be taxed at 10% – $3,000
For the next $6,000, he will be taxed at 12% – $720
His total Property Tax will be $3,000 + $720 = $3,720
Owner-Occupied Property (OOP) Tax Rate
If you are staying in your property, the tax rate that you are obligated to pay is significantly reduced.
Find out how much is your applicable tax rate in the table provided below.
| Annual Value (AV) | Progressive Tax Rates | Property Tax Payable |
|---|---|---|
| First $8'000 | 0% | $0 |
| Next $47'000 | 4% | $1'880 |
| Next $15'000 | 6% | $900 |
| Next $15'000 | 8% | $1'200 |
| Next $15'000 | 10% | $1'500 |
| Next $15'000 | 12% | $1'800 |
| Next $15'000 | 14% | $2'100 |
| Above $130'000 | 16% |
OOP Case Study
Mr B owns a landed property and stays in it together with his family.
The Annual Value for his property is at $66,000 ($5,500 per month).
For the first $8,000, he will be taxed at 0% – $0
For the next $47,000, he will be taxed at 4% – $1,880
For the next $11,000, he will be taxed at 6% – $660
His total Property Tax will be $1,880 + $660 = $2540
Can You Challenge The Annual Value Determined by IRAS?
The short answer is yes.
IRAS does provide an avenue for you to appeal if you feel that the AV for your property is not fairly determined. However, you do need to substantiate your claims by providing supporting documents to IRAS showing that the market values have indeed dipped.
You can make the appeal by clicking on this link.
*Do note that a fee of $50 or $200 is payable depending on whether your property is owner-occupied or non-owner-occupied respectively.
What if You Are Unable to Pay?
If you encounter financial difficulties and are not able to pay your property tax, you can contact IRAS to arrange for payment by installments. IRAS will then consider your request on a case-by-case basis.
Contact IRAS by clicking on this link.
Sharing IS Caring
If you found this post useful, share it with your friends so that they too can understand how the property tax system in Singapore works!
Leave a comment below to let me know if I have missed out anything that you wish to know about Property taxes in Singapore. Cheers!
Hi Marcus,
Do we have to pay property tax while the building/property is under construction?
Regards
Adeline
Hi Adeline
For Building Under Construction projects you will only need to start paying tax upon receiving the Certificate of Completion which is around one year after the project attains T.O.P status and the ownership is fully transferred to you as the owner. 🙂
Great insights of the property taxes for property for sale in Singapore, cheers