By Dee Lim
If you own property in Singapore, you will have to pay property tax.
In a nutshell, property tax is applicable to any property whether it's owner-occupied, rented out or left vacant.
Payment for tax is due once a year – you’ll receive your property tax bill at the end of the year and payment is due by 31 Jan the following year. For those who are issued with ad-hoc property tax bills, you'll have a month to pay.
1. Annual value is important
The amount of property tax you have to pay isn't fixed because it's tied to the annual value of your property. Factors that influence this include changes in the market rental value of comparable properties or any physical changes made to your property that would affect its value. The Inland Revenue Authority of Singapore (IRAS) reviews the annual value each year and you'll receive a valuation notice if there are changes in your property's value.
2. Who's living on the property?
There are two tax rates that are applicable – one for owner-occupied properties and one for rental properties. These are tiered based on the value of your property, and the owner occupied tax range goes from 0 to 23 per cent, while the rental tax range is from 11 to 27 per cent. Keep in mind that the owner-occupier tax rate is applicable on only one property, and you'll be taxed at non-owner-occupier rates for any other property even if you're keeping it as your second home. This is also applicable to vacant properties that you own.
3. Difference between property tax and rental income tax
In short, property tax is based on property ownership – so, the more properties you own, the more tax you'd need to pay. Rental income tax is based on the revenue that you are generating from the rental of your property and not on the property itself, so make sure that you're declaring the money you make from rental in your income tax returns.
4. Tax reliefs for property tax
There are a number of tax reliefs for property, including a tax rebate for eligible properties in 2023, which is calculated at 60 per cent of the 2023 payable tax and capped at $60. You could also be eligible for tax reliefs under income tax if you have rental properties, and these are for items like maintenance and repairs, and fire insurance, among others.
5. What happens if you don't pay?
If you do not make payments by the due date, there are several actions that IRAS will take. First, a penalty of 5 per cent of your total unpaid tax is imposed, which you can apply to have waived provided you meet the terms and conditions. Should payment still not be made after that, IRAS may appoint agents like your bank, employer, tenant or the lawyer who handled the sale of your property, to recover the overdue tax. One of the other ways IRAS will try to have your property tax settled is to seize your property and initiate a public auction to settle the overdue tax.