To make the tax system more progressive, the Government is raising property tax rates for high-end residential properties in Singapore Budget 2013, with the largest increases applying to investment properties that are not occupied by their owners.
The majority of owner-occupied homes will have lower tax rates in Singapore Budget 2013.
“This is fair,” said Minister of Finance Tharman Shanmugaratnam in his Singapore Budget 2013 speech on Monday.
“The property tax is a wealth tax and is applied irrespective of whether lived in, vacant or rented out. Those who live in the most expensive homes should pay more property taxes than others.”
Owner-occupied residential properties
Source: Ministry of Finance
The new property tax schedule for owner-occupied homes will ensure that most retirees will end up paying lower property taxes, he added.
The number of households that do not have to pay property tax will rise. Currently, only those whose houses have an annual value of $6,000 or less do not have to pay property tax. This will now include those whose properties have an annual value of $8,000 or less, which will enable 950,000 owner-occupied homes to enjoy tax savings.
After this Singapore Budget 2013, all one- and two-room HDB flats will continue to pay no property tax. Homes with annual values of $12,000, such as a five-room flat, will experience tax savings of $80 or 33 per cent of their current property tax bill.
The top 1 per cent of owner-occupied homes, which includes 12,000 homes here, will face increased taxes.
However, the increase will be small, Mr Tharman said, except for those at the very top end. A landed property in the central area with an annual value of $150,000 will have to pay 15 per cent tax in 2014, or an increase of $5,120 per year, up from 10 per cent now.
There will be more significant hikes to the tax rates for high-end investment properties. Currently before Singapore budget 2013, residential properties that are not occupied by their owners have a flat tax rate of 10 per cent. There will be new marginal tax rates of 12 to 20 per cent for these investment properties.
This will mean an increase in property taxes paid for non-owner-occupied homes with annual values of above $30,000. These properties belong to the top one-third of all non-owner-occupied homes.
Non-owner-occupied residential properties
Source: Ministry of Finance
Again, the increase will only be significant for investment properties at the high end. Most suburban condominiums will see a small increase in property tax of about $100 to $300 a year.
With Singapore Budget 2013, a high-end property, such as a landed home in the central area with an annual value of $150,000, will see an increase in property tax of $9,000 a year.
This revised property tax structure will be phased in over two years, from Jan 1, 2014.
The revised rates will take full effect from Jan 1, 2015.
Property tax rates for non-residential properties remain unchanged at a flat 10 per cent for Singapore Budget 2013.