In life, nothing is certain except death and paying taxes.
The latter part is especially true in Singapore.
According to the latest data, Singapore has the World’s second-highest home ownership rate at 90.4%.
This means that every 9 out of 10 Singaporeans own a property in Singapore.
Whether you are living in an HDB, Condominium or landed property, you will have to pay property tax.
If you are looking to purchase a property for investment, one of the hidden costs that will affect your rental yield is property tax.
Therefore, as long as you are a property owner, it is essential that you know how to calculate and pay property tax in Singapore.
What is Property Tax?
Property tax is a tax on property ownership. It applies whether your property is occupied by you(owner-occupied), rented out(non-owner occupied) or left vacant.
How is Property Tax different from Income Tax?
The difference is that income tax is a tax on your earnings, including the rental income if you are renting out your house.
Income Tax for Rental Income
Rental income is subject to income tax. If you are receiving rental income from your properties, besides paying property tax, you are also required to pay income tax on the net profit.
How to Calculate Property Tax?
Property tax is calculated by multiplying the annual value of your property with the relevant Property Tax Rates that apply to you.
A straightforward method will be using IRAS Property Tax Calculator. However, we encourage you to read on and find out yourself how IRAS calculates your property tax.
You can find the relevant Property Tax Rates table below.
What is Annual Value?
Annual value is the estimated annual rent of your property assuming your property is rented out.
For example, if your property has an annual value of $44,400, it is equivalent to market rent of $3,700 per month assuming your property is rented out.
How to calculate Annual Value?
There are two methods you can use to calculate your property’s annual value.
The first and more straightforward method is to log into Inland Revenue Authority of Singapore(IRAS) e-Service View Property Portfolio and select the property address you wish to check.
The second method is to do a comparison of similar unfurnished properties. The way annual values are determined is the same for owner-occupied, rented out or vacant properties.
Annual Value = gross annual rent – furniture – furnishings – maintenance fees
You can check if your annual value is fair by looking up rentals for Private Residential Properties at Rental contracts of private residential properties.
Please note that for rental properties, IRAS may not necessarily adopt the agreed rental in your Tenancy Agreement.
Why does my Annual Value Change?
IRAS reviews the annual value of properties yearly to reflect the changes in the market rental values of comparable properties.
Hence, the annual value of your property may change every year, as rental prices can increase or decrease.
Your property’s annual value may be adjusted due to changes in the market rental value of similar properties or any physical changes to your property that affect the rental value.
IRAS will send you a Valuation Notice to inform you of any increase or decrease in annual value and the effective date.
What if I object to IRAS Annual Value assessment?
If you think that your property’s annual value is unfair, you can file an objection at Object to Annual Value.
In your objection, you need to state your reasons, your desired annual value and any evidence to support it.
Reasons such as tax rates are too high, no rental income as your property is owner-occupied or financial hardship are not valid grounds for objection.
You can object to the annual value of your property. However, you should not be objecting to the property tax rates as they are fixed according to the occupancy status of your property(owner-occupied or non-owner-occupied).
Deadline for Filing Objections
You should file an objection within 30 days from the date of the Valuation Notice.
You can also object at any time in the year to the annual value of your property as shown in the Valuation List even if you do not receive a Valuation Notice.
The Valuation List contains the annual values of all properties in Singapore. Objection to the annual value in the Valuation List have to be made by 31 Dec of the year of the Valuation List.
If you wish to view the annual value of a property before you buy it, you may check it in the Valuation List. There is a charge of $2.50 for each enquiry.
Filing an Appeal
If the objection to your annual value has failed, you can appeal to the Valuation Review Board within 30 days of the notice of the decision.
In your appeal, you would have to state the grounds of your request and indicate whether an agent represents you.
A fee of $50 is payable for residential properties taxed at owner-occupier tax rates, and $200 for any other types of properties.
Please note that Property tax is payable even if you have filed an objection or appeal.
IRAS implements a progressive property tax structure for Residential Properties. This means that the higher the value of your residential property, the higher your property tax rate.
There are two types of Property Tax Rates; Owner-Occupier Tax Rate and Non-Owner Occupied Tax Rate.
Mary owns a condominium with an annual value of $44,400. She is living in it with her family. How much property tax does she have to pay?
First $8,000 = $0
Next $36,400 @ 4% = $1,456
Total Property Tax = $1,456
Mary decides to rent out her condominium with an annual value of $44,400. She is no longer living in it with her family. How much property tax does she have to pay?
First $30,000 @ 10% = $3,000
Next $14,400 @ 12% = $1,728
Total Property Tax = $4,728
As you can see from the examples, the property tax payable if you are not living in your property is more than three times.
This is important if you are looking to purchase a property for investment as property tax is one of the hidden costs that will affect your rental yield.
Please note that if you do not live in your property and don’t rent it out either but left it vacant, you will still be charged according to the non-owner occupied tax rate.
Remission of Property Tax
If you are going to demolish or rebuild your property for your own stay, you can apply for property tax remission and be taxed at owner-occupier tax rates for a maximum period of two years.
There are a few Eligibility Conditions for Remission such as:
- Your land is not occupied.
- No rent or fee is charged or received for the occupation or use of your land.
- You will be living for at least one year in your replacement house following the Temporary Occupation Permit (TOP) date or the Certificate of Statutory Completion (CSC) from the Building Authority.
- The annual value of your land parcel is less than $190,000.*
- You or your spouse is not enjoying the owner-occupier tax rates on another property during the remission period.**
*The Annual Value of land is calculated at 5% of the estimated freehold market value.
**If you or your spouse is enjoying the owner-occupier tax rates on another property during the same period, you can inform IRAS to withdraw the owner-occupier tax rates on that property to be eligible for this remission.
Apply for Remission
To apply for Property Tax Remission, submit a Written Undertaking not later than 30 days after the TOP date or CSC of your replacement house.
When to Pay Property Tax?
You need to pay property tax yearly. At the end of each year, you will receive your property tax bill for next year.
You will need to pay your property tax by 31 January. Otherwise, you may be charged a late payment penalty of 5% on the unpaid tax.
For ad-hoc property tax notice, such as if you were to take over ownership of a newly purchased house, payment will be due one month from the date of notification.
How to Pay Property Tax?
Generally, there are four ways to pay your property tax.
- General Interbank Recurring Order(GIRO)
You can apply for payment using GIRO through the following ways:
Online GIRO Application – Instantaneous approval by Banks
- myTax Portal – Applicable for both Individual Income Tax and Property Tax(currently available for DBS/POSB and OCBC customers only)
- Internet Banking(for DBS/POSB, OCBC and UOB customers)
- AXS stations (for DBS/POSB customers)
GIRO Form Application – Allow for three weeks to process and approve
- Complete the GIRO application form and submit to IRAS
- Electronic Payment
- Internet Banking Bill Payment
Internet Banking for tax payment is available to the following banks: DBS/POSB, OCBC, UOB, CitiBank, BOC, CIMB, HSBC, ICBC, MayBank, RHB, Standard Chartered Bank, State Bank of India
(Only DBS/POSB, HSBC, OCBC, Standard Chartered Bank and UOB are applicable for corporate account holders).
- DBS PayLah! Mobile App
- Phone Banking
Only available for DBS/POSB, OCBC and UOB account holders who have subscribed to this service.
Only available at DBS/POSB or OCBC Automated Teller Machines.
- AXS Station
- AXS e-Station (Internet) / AXS m-Station (Mobile)
- SAM Kiosk
- SAM Web / SAM Mobile
Only available over the counter at any Singapore Post Branch.
- Internet Banking Fund Transfer
- Credit Card
Check with your credit card issuing bank if they offer any payment scheme to pay tax using your credit card.
- Telegraphic Transfer
Telegraphic Transfer is only for payments from overseas, and the payment modes listed above are not applicable.
If you are not in Singapore or only maintain an overseas bank account, IRAS may accept payment by Telegraphic Transfer.
Who is to Pay for Property Tax?
- All Owners, including joint owners.
- Power of Attorney.
- A lessee who has taken more than 3 years lease with the government or any public authority.
Anyone whose name is on the Valuation List is defined as the owner.
The property tax bill will be issued to the owner who is listed first in the Notice of Transfer filed by the seller’s lawyer.
The payment arrangement on the property tax payable is a private matter to be settled among the property owners. IRAS does not issue separate bills.
If you have gone through the whole guide, by now, you would have a better understanding of how to calculate and pay your property tax.
So the next time when you are buying a property, you will know how much property tax you need to pay beforehand and can better prepare your budget.