8 in 10 private home owners and up to 80% of those who own a HDB flat will receive a christmas gift that keeps on giving. Due to the marked-down annual values of up to 260,000 homes, 80% of home owners will pay almost 3 to 20 per cent less property tax in 2016, according to the Inland Revenue Authority of Singapore (IRAS). The owners of 380,000 four-room HDB flats, 250,000 five-room HDB flats and 65,000 ECs (executive flats) will also see their taxes greatly reduced; some may not even have to pay any property taxes next year.
Photo: The Foresta @ Mount Faber
Considering the IRAS has received $4 billion in property taxes in the 12 months leading up to March 31, it may be a small dent, but to the home owners, it may be truly happy news. As residential rents have been on the decline for sometime now, and with the expected supply boom next year, property owners may be facing some struggles when the onslaught of new private homes and BTO flats enter the market in 2016. Some of the effects can already be seen in the market in the latter half of 2015.
As property values are calculated based on the rental value of similar properties in the vicinity of a said property, the falling rental rates have no doubt been part of the reason for the tax cuts. Rents for private homes have fallen 3.3 per cent this year. Though a progressive tax system has already been implemented last year, with home owners who are living in their properties not having to pay taxes for the first $8,000 of their property’s annual value, this readjustment will help them save even more.