3-tier property tax rates

SINGAPORE is shifting to a progressive property tax system that will see lower and middle-income property owners who live in their homes paying less tax.

Higher-income property owners, however, will have to pay slightly more for their property tax.

Delivering the Budget statement in Parliament on Monday, Finance Minister Tharman Shanmugaratnam announced that a three-tier property tax system will be introduced at zero, 4 and 6 per cent.

The first $6,000 of the annual value (AV) of a home – which is calculated based on the monthly market rent the home fetches – will be exempt from property tax.

The next $59,000 of the AV balance will be taxed at 4 per cent, and the balance of AV in excess of $65,000 will be taxed at 6 per cent.

The new property tax system will benefit most Singaporeans. Owner-occupied homes will enjoy tax savings of $240 as a result of the exemption of the first $6,000 of AVs.

Mr Tharman said that a moderately progressive property tax system, together with an income tax system that collects more taxes from better-off individuals and a flat GST rate that everyone pays, will together form a fair system of taxes in Singapore.

‘Everyone pays something, but the rich pay more. Taken together, the overall burden of taxes will and must remain low by international standards,’ he added.

Currently, owner-occupied residential properties are taxed at a concessionary 4 per cent rate. All other properties are taxed at 10 per cent.

Owner-occupied residential properties with Annual Values (AV) below $10,000 also currently enjoy the on-going 1994 property tax rebates ranging from $25 to $150, depending on the AV of their properties.

These will be replaced by the new property tax schedule, for property tax payable from January 2011.

SOURCE: Straits Times