Sunday, March 10, 2013

Higher property taxes for 57,000 investment homes

Mar 08, 2013 - By: Singapore

Once the Budget’s new tax structure takes full effect in 2015, a third of Singapore’s investment homes would face higher property levies. At present, there are 169,000 investment homes out of 962,000 owner-occupied properties in Singapore.

According to a statement released by the Ministry of Finance on 7th March 2013, about 57,000 homes with annual values exceeding $30,000 would be taxed with higher rates, where the progressive tax rates would range from 12% to 20% of a property’s annual value.

For the remaining investment homes that have annual values of $30,000 and below, or about 112,000 properties, the existing property tax rate of 10% would continue to apply.

The annual value is calculated by estimating the annual rental income the property can fetch. For instance, a suburban condominium is estimated to have an annual value of $30,000.

According to experts, the changes in property tax rates would likely affect the high-end home market, particularly with the removal of property tax refund concession for vacant properties starting from 2014. Significantly, the rents for high-end homes have been hit badly as it fell 7.4% in prime districts 9, 10 and 11 from October 2012 to December 2012 in comparison to the same period in 2011.

Before the revised progressive tax structure, vacant properties were granted full property tax refund for the duration of vacancy despite reasonable efforts by owners to find a tenant. However, with effect from 2013, these vacant units would be taxed at prevailing property tax rates.

Investor Charles Lee, 45 shared that he expects to spend a couple of hundreds of dollars on property taxes once the new tax regime kicks in. Although it may not cast a huge impact on his condominium, it would however, affect the rental yields after paying the taxes and instalments.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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