Marina Bay's construction from my carOn the 13th July in The Straits Times’ Forum, Ms Deanna Choo, Director (Corporate Communications) of IRAS responded to Mr Paul Chan’s misconceptions (3rd July) below:-
1) He thought IRAS estimates the annual value of properties based future market trends.
2) He also felt that increases in the annual value of a property based on market rentals were not right for owner-occupiers.
IRAS responded as followed:-
1) “The property tax is pegged to the annual value of the property, which is determined based on market rentals of similar properties prevailing at the time of assessment. It does not take into account any forecast or estimate of future movements in market rentals.”
2) Property tax is a tax on property ownership ie. regardless of whether the property is tenanted. Income tax is imposed levied on rental income from properties that are rented out.
IRAS is of the opinion that property tax calculated against current market rentals (as against transacted property prices) is relatively more stable to homeowners.
Question for IRAS – Can share with us on how you collect information on current market rentals?
Future changes
The Government introduced in Budget 2010 a progressive property tax schedule for owner-occupied residential properties from 1 Jan 2011.
Currently, home owners who are eligible for the owner-occupier concession pay property tax at a flat rate of 4% on the Annual Values of their properties. Owners of non owner-occupied residential properties and other properties are taxed at 10%.
Will you as a homeowner be expected to pay more or less on property tax?
Based on IRAS estimates, all HDB flat owners and the vast majority of residential property owners will enjoy an effective property tax rate lower than 4% of annual value under the new method. IRAS has done some calculations to demonstrate how and why most of us would be paying less property tax in e-Tax Guide cited below.
For owner-occupied properties,
- If your annual property value is $6,000 or less, you pay nothing under existing and new 2011 law.
- If your annual property value is $24,000, you would enjoy $240 tax savings.
- If your annual property value is $80,000, you would pay $60 more than under current law.
IRAS e-Tax Guide - http://www.iras.gov.sg/irasHome/uploadedFiles/Quick_Links/e-Tax_Guides/Property/e-Tax%20Guide.pdf
The Straits Times, July 13, 2010
