A Simple Guide To Property Tax In Singapore

If you are planning to buy a property in Singapore, you should pay attention to the property tax that applies in the country as it could have both short and long-term financial impacts on your business. Let’s take an in-depth look at how the Singapore property tax works, the calculation method, the deadlines, and property tax exemptions. 

What is property tax?

According to IRAS, property tax is a tax levied on your property ownership in Singapore, regardless of whether you live in the property or rent it out. Along with other taxes, the property tax would be channeled into the national fund. In particular, it will be used for investment in infrastructure, defense, education, recreation, health, and services. This will significantly benefit your long-term plan to stay in Singapore.

Properties subject to property tax in Singapore are divided into three categories:

• Residential properties occupied by owners;
• Residential properties not occupied by owners; and
• Non-residential properties (commercial and industrial property).

Do note that property tax and rental income tax are two different types in the Singapore tax system. Unlike property tax, rental income tax is levied on income from renting out a property (progressive rate for tax residents and 22% for non-residents).

Singapore property tax calculation

Overall, the annual property tax in Singapore is calculated as follows:

[Annual property tax = Annual Value (AV) x Property tax rates]

For example, if the AV of your property is $50,000 and your tax rate is 10%, you would pay $30,000 x 10% = $5,000 in property taxes.

The annual value (AV) of a property would be the estimated gross annual rent of the property if it were to be leased, excluding furniture and maintenance costs. AV is determined based on the estimated market rent of similar or comparable properties.

Usually, IRAS will consider local rental contracts to determine your property’s AV. But you can also check the AV of any property in Singapore by using the online AV inspection service provided by IRAS ($2.50 per search).

Singapore property tax rates

Property tax rates in Singapore vary according to different types of properties. See the tables below to see property tax rates in detail.

Tax rates for owner-occupied residential properties

Owner-occupied residential property is defined as a property where the owner lives (e,g., condominiums, HBD flats, etc.). This type of property is taxed with concessionary progressive tax rates:

Tax rates for non-owner-occupied residential properties

Non-owner-occupied residential property is defined as a property that the owner does not live in. This type of property may be rented out and is subject to the following progressive tax rates:

Excluded properties:

• Accommodation facilities within any sports and recreational club;
• Chalet;
• Child-care center, student-care center, or kindergarten;
• Welfare home;
• Hospital, hospice, or rehabilitation place, convalescence place, or place for similar purposes;
• Hotel, backpackers’ hostel, boarding house, or guest house;
• Serviced apartment;
• Staff quarters that are part of any property exempted from tax under s6(6) of the Singapore Property Tax Act
• Student’s boarding house or hostel;
• Dormitory for workers.
• The owners of these properties are not required to apply to IRAS for a 10% tax rate. However, they must get approvals for the use of the properties.

Tax rates for non-residential properties

Non-residential properties such as commercial and industrial buildings and land are taxed at 10% of the Annual Value. Hence, owner-occupied tax rates do not apply to non-residential properties even if you have purchased the property for your own use or occupancy.

Tax rates based on the use of property

• Home Office: A home office may qualify for the property tax rates for residential properties because it is used primarily for residential purposes. However, you must meet the terms and conditions set by URA or HDB for the home office scheme.
• Childcare Center: For landed homes used as childcare centers, approval for changes to use must be obtained from URA. The tax rate is 10%.
• Shophouse: The residential component of shophouses will be subject to the property tax rates for residential properties, while the commercial component will continue to be taxed at 10%.
• Vacant property: Vacant residential properties will be taxed at the non-owner-occupied tax rates, while vacant non-residential properties will be taxed at 10% of the Annual Value. No tax/concession deductions for vacant properties.

Singapore property tax deadlines

The payment due date for the annual property tax bill is 31 Jan each year. You will be penalized and face enforcement action for late or non-paying taxes.

IRAS may take the following actions if you fail to pay by the due date:

• Apply a late payment penalty. Unless you are on an approved installment plan, a 5% late payment penalty will be charged on unpaid taxes if full payment is not received by the due date.
• Appoint an agent such as your bank, employer, tenant, or attorney (handling the sale of your property) to recover taxes that are due.
• Initiate the sale of the property through a public auction to settle taxes that were due.

Singapore property tax exemptions

Tax exemptions are available for properties that are owned and used by registered charities. Section 6(6) of the Property Tax Act provides for exemptions from payment of Property Tax where the Comptroller believes that a building or part thereof is exclusively used:

• As a place of public religious worship;
• For public schools that receive grant assistance from the Government;
• For charitable purposes; or
• For purposes conducive to social development in Singapore.

A partial exemption may be granted if only parts of the building are eligible for the exemption.

To apply for the exemption, please refer to the IRAS website.

If you have any questions about Singapore property tax, feel free to message us. Biz Atom is always available to assist you!

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