Property Taxes in 2023

Starting in 2023, most homeowners in Singapore can expect to pay more property tax due to increases announced in Budget 2022 by the government. The revision is part of IRAS’s annual review and reflects the rise in market rents.

Understanding property tax

Property tax is a tax on property ownership, whether it is rented out, owner-occupied or vacant.

Property tax rates

Property tax rates on owner-occupied and non-owner-occupied residential properties are applied on a progressive scale. All other properties are taxed at 10% of the Annual Value.

The formula is Property Tax = AV x Tax Rate.

How to determine the annual value?

The AV of buildings would be the estimated gross annual rent of the property if it were to be rented out, excluding furniture, furnishings, and maintenance fees. It is determined based on estimated market rentals of similar or comparable properties and not on the actual rental income received.

New owner-occupied tax rates from 1-Jan-2023:

EXAMPLE:

So say you reside in a residential property with a total AV of $36,000 below is how much you’ll pay:

Total property tax payable = ($880 + $300) = $1,180

New Non-owner-occupied tax rates from 1-Jan-2023:

Non-owner occupied residential properties are condominiums, HDB flats, or other residential properties in which the owner does not live (“occupy”). Hence, owner-occupier tax rates do not apply.

SUMMARY

The property tax increase, which will take place in two steps starting in 2023, and 2024 is expected to impact higher-end properties with annual values exceeding $60,000. This increase in tax rates and annual values will further reduce the rental gains for investors or non-occupier homeowners.

In return, many industry experts believe that due to the tax increases, landlords whose properties are up for renewal will take the opportunity to increase the rent even further, adding more to the pain of the high cost of living for many tenants.