Government introduces one-off property tax rebate for homeowners, this is how it impacts you
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PUBLISHED ONDecember 05, 2023 2:45 AMBySophiyanah David
As we approach the dawn of 2024, homeowners are bracing themselves for an impending change in their financial landscape. The spotlight falls on the property tax domain, where a confluence of factors is set to bring forth adjustments.
However, in a move to soften the impact of these changes, the government has introduced a one-off property tax rebate to relief homeowners amidst cost-of-living concerns.
Property tax increase in 2024
Anticipated shifts in property taxes are on the horizon for most Singaporean homes in 2024. The surge is attributed to the dual forces of ascending market rents and annual values for residential properties. Adding to this financial adjustment, higher property tax rates are earmarked for specific private residential properties.
This reassessment by the Ministry of Finance (MOF) and the Inland Revenue Authority of Singapore (IRAS) aims to adapt to the evolving dynamics of the real estate landscape.
Property tax rates for residential properties (effective from Jan 1, 2024):
| AV range | Owner-occupier tax rates (per cent) |
| First $8,000 of AV | – |
| Next $22,000 of AV | 4 |
| Next $10,000 of AV | 6 |
| Next $15,000 of AV | 10 |
| Next $15,000 of AV | 14 |
| Next $15,000 of AV | 20 |
| Next $15,000 of AV | 26 |
| Above $100,000 of AV | 32 |
AV increase projections
In sync with these changes, the Ministry of Finance (MOF) projects a notable increase in Annual Values (AVs). For HDB flat owners, a projected surge of 20 per cent to 25 per cent is expected, while the majority of private residential properties, constituting 80 per cent, might witness an increase ranging between 15 per cent and 25 per cent.
These adjustments, reflective of the market's ebbs and flows, set the stage for a recalibration of property taxes in the coming year.
Government one-off rebate
Recognising the potential strain on affected property owners, the government has introduced a one-off property tax rebate. This rebate, extending up to 100 per cent, is tailored to encompass all owner-occupied residential properties.
Positioned as a strategic buffer, this rebate aims to alleviate the immediate impact of the forthcoming changes, offering a measure of financial reprieve to homeowners.
| Property type | One-off property tax rebate | |
| HDB | One room and two room | 100 per cent |
| Three room | 70 per cent | |
| Four room | 50 per cent | |
| Five room | 40 per cent | |
| Executive | 30 per cent | |
| Others | Private | 15 per cent* |
Source of information: MOF and IRAS
*At a cap of $1,000
Progressive tiered rebate
To ensure a fair and progressive property tax regime, the one-off rebate is tiered. This tiered approach reflects the principle that those with greater means should contribute their fair share to the tax burden.
Tax payable and rebate impact
With the introduction of the one-off rebate, a nuanced impact is anticipated on the tax payable by different categories of homeowners. For owner-occupiers of one-room and two-room HDB flats, the rebate translates into a complete exemption from property tax in 2024.
As for other HDB flat types and private properties, the rebate will automatically offset against any property tax payable, resulting in relatively modest average tax increases:
| HDB flat type | Average tax payable in 2024 (Post-rebate) | Average increase in tax (Post-rebate) |
|---|---|---|
| Three-room flat | $4.10 per month | $1.50 per month |
| Four-room flat | $12.80 per month | $2.40 per month |
| Five-room flat | $17.90 per month | $4.30 per month |
| Executive HDB | $22.30 per month | $6.30 per month |
Effect on HDB flats and private properties
The anticipated rise in property taxes is paralleled by an increase in the Annual Values (AVs) of HDB flats and private residential properties. Set to take effect from Jan 1, 2024, these adjustments are a response to the escalating market rents.
Analysts, however, believe that these changes might not wield a significant impact on residential demand or property prices, especially for luxury properties.
Impact on investment properties
In this recalibration, owners of investment properties find themselves in a unique position. Unlike owner-occupied properties, investment properties will not benefit from the one-off rebate.
Consequently, this segment of property owners is poised to bear the brunt of the combined increase in property values and taxes.
Potential buyer behaviour change
With the impending surge in property taxes, a subtle shift in buyer behaviour is anticipated. The increased financial scrutiny might nudge prospective buyers towards slightly smaller homes, showcasing a growing trend of cost-conscious decision-making in the real estate arena.
Developers, in response, may also adopt a more measured approach in their land bids, acting as a stabilising force in the property market.
Impact on landlords
Higher property taxes have a ripple effect on landlords as well. Initially, there might be resistance to lowering rents as landlords grapple with increased property operating costs. However, in the event of a softened rental market, landlords may find themselves compelled to adjust their expectations to prevent higher vacancy costs, creating a delicate balance in the rental landscape.
Annual Value threshold increase for social support schemes
In tandem with these changes, the government is set to increase the annual value thresholds used in various social support schemes. This strategic move ensures that those with greater needs continue to receive support.
Social support schemes, including MediShield Life premium subsidies, are vital components of Singapore's commitment to social inclusivity.
A reminder to pay your tax
As these changes unfold, the IRAS issues a gentle reminder to all property owners: The deadline for paying property tax for 2024 is Jan 31. Keeping in mind the diverse financial circumstances of property owners, IRAS encourages those facing challenges to initiate discussions for suitable payment plans before the due date. Failure to adhere to the payment schedule may incur a five per cent penalty.