ANNUAL value (AV) bands for owner-occupied residential property tax rates will be revised from January 2025, and homeowners can expect to pay the same or lower property tax bills as a result.

Announcing the change in his Budget speech on Friday (Feb 16), Finance Minister Lawrence Wong noted that a two-step increase in property tax rates was announced in Budget 2022 as a wealth tax, targeting all investment properties and higher-end owner-occupied private properties.

But since 2022, market rents have increased significantly due to the combination of strong demand and Covid-related supply constraints, subsequently pushing up AVs. Property tax payable is calculated based on the property’s AV.

While the property tax rate increases were originally expected to mainly target the top 7 per cent of owner-occupied residential properties, the sharp increase in AVs has resulted in the proportion of affected properties nearly doubling, to 13 per cent.

Currently, property tax is charged according to AV bands from S$8,000 to S$100,000.

The lower threshold will be raised to S$12,000 from S$8,000, while the higher threshold will be raised to over S$140,000, from over S$100,000. Corresponding adjustments will be made to bands in between.

As a result, homeowners can expect to pay the same or lower property tax bills at each of the band levels, assuming there is no change in their properties’ AVs and before any rebate, said Wong.

“This will still uphold the intent of the property tax changes, and ensure that those residing in high-value properties continue to pay their fair share of taxes,” he added.

Wong noted that the government had provided a rebate to cushion the impact of the property tax changes this year. The government will continue to monitor the property market and provide another rebate in 2025, if needed.

He also pointed out that there may be retirees living in higher-end residential homes who face cash flow issues when paying their tax bills.

For these retirees, the Inland Revenue Authority of Singapore (Iras) will offer a 24-month instalment plan without any interest. They can apply for the plan via Iras’ website, or contact Iras for more details.

‍

Credit : THE BUSINESS TIMES