Two years ago, Deputy Prime Minister and Finance Minister Lawrence Wong introduced a “two-stage increase” in home property tax in Singapore’s 2022 Budget. It was to be a “wealth tax” targeting all investment properties and higher-value segments of owner-occupied private properties, he said in the 2024 Budget announcement on Feb. 16.

It was supposed to affect the top 7% of owner-occupied residential properties. However, starting in 2022, rents rose sharply, significantly increasing annualized values ​​(AVs) and affecting 13% of owner-occupied properties. According to CBRE Research, the URA index for private residential rents increased by 35.3% between Q1 2022 and Q4 2023.

Under Budget 2024, all AV bands of property tax rates for owner-occupied residential property will be increased from 1 Jan 2025. The Inland Revenue Authority of Singapore (IRAS) will also offer a 24-month interest-free instalment plan to retirees living in high-end residential properties who face liquidity problems in paying their property tax bills, says DPM Wong.

Read also: Property Unpacked: How do the recent property tax changes affect you?

Table 1: Revised AV bands for owner-occupied properties

Source: MND

Currently, property tax is levied on properties with an AV of $8,000 to over $100,000. The lower limit will be raised from $8,000 to $12,000, while the highest limit will also be raised from over $100,000 to over $140,000. The limits in between will also be adjusted accordingly. This will preserve the intent of the property tax changes, Wong stresses, and ensure that “those living in higher-value properties continue to pay their fair share of taxes.”

However, the government is providing a rebate to cushion the impact of property tax changes this year and will continue to monitor the property market and provide another rebate in 2025 if necessary.

According to CBRE, starting January 1, 2025, property taxes for residential properties with an AV of $50,000 will decrease by 31% compared to the current property tax. For residential properties with an AV of $100,000, property taxes will decrease by 28% starting January 1, 2025, while residential properties with an AV of $150,000 will decrease by 21% compared to the current property tax.

Table 2: Percentage difference in property tax payable for properties of different AVs

Source: CBRE Research

“The difference in property tax payable is more significant for lower AV value properties, except for properties with AV values ​​close to the lowest threshold,” says Tricia Song, CBRE’s head of research for Singapore and Southeast Asia. “For properties with AV values ​​of $140,000 and above, the difference in tax payable remains at $5,760, which is marginal for high AV value properties. Therefore, the revision of the AV bands is expected to benefit mid-range property owners the most.”

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Those living in higher-end properties with little or no income may have previously considered downgrading, Song adds. “With the revised AV bands and the 24-month interest-free retiree payment plan, owners may be able to pay the property tax and keep their current property.”

According to Christine Sun, chief researcher and strategist at OrangeTee Group, historically, the AV value of most properties was below $30,000, which meant that homeowners paid only 4% in property taxes. However, due to recent rent increases, many homeowners’ AV values ​​have exceeded the $30,000 mark, which means higher taxes for them, she notes.

Read also: Budget 2024: Open market rental vouchers for couples waiting for their HDB flat to be completed

“This has affected many people, especially those who did not benefit from the rent increase and felt they were unfairly penalized,” Sun says. “Therefore, the changes are seen as fair and beneficial to most homeowners, especially those who are not landlords. The adjustment of the AV bands for 2025 is also timely because rental prices may not drop anytime soon and could remain stable in certain areas as fewer condominiums or housing projects are being completed this year.”

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