This year’s budget and parliamentary debates have been centred around equality and support for those who need them.
With that as a background for discussion, Finance Minister Heng Swee Keat has said that potentially wealth taxes should be targeted at fixed assets such as property.
The focus of wealth taxes on fixed assets such as property
Could moving towards this direction potentially impact the property market, in particular, the luxury property segment?
According to the Finance Minister, most of the household wealth in Singapore are held in properties. Many MPs have proposed alternative means of taxing the wealthy but thus far the 3 main areas in which the wealthy are paying more taxes on are personal income, consumption and property.
While the taxes on the former two are relatively low compared to making other developed countries in the West, property tax has increased over the past few years.
Who will overall inflation and higher property taxes affect the most?
Following the previous round of stamp duty revision last year, locals now pay and additional buyers stamp duty (ABSD) of 12% more for their second property and 15% more for their third and subsequent properties.
For foreign property buyers, the stamp duty is 20% regardless of the number of properties purchased.
While the country needs to reflect annual growth and inflation is inevitable, the increasing demand and commonality of home ownership in the private sector could be an indication to the government of the household wealth levels here. However, for those who are simply owner-occupiers, property taxes remain relatively manageable.
For those looking at buying properties for investment purposes however, some re-calibration of fixed and liquid assets as well as long-term financial sustainability will be required.
While luxury homes have higher taxes, owner-occupiers, in general, enjoy lower property taxes or at concessionary rates.
For those who own more than 1 property or have rented out their properties or left it vacant, are however taxed more heavily.