MR DENIS Distant said that the benefits of the new progressive property tax may not last long if IRAS starts revaluing the Annual Value (AV) of properties (BT, Feb 26, ‘Property tax boon may be short-lived’).
Property tax is a tax levied on the ownership of property, based on the AV of the property. AV reflects the prevailing market rentals of properties. The tax payable will thus increase with an increase in market rentals and vice versa.
IRAS will only adjust the AVs of properties if the market rental data support such revisions. Currently, owner-occupied residential properties are taxed at a flat 4 per cent.
With the progressive property tax schedule, properties with an AV of less than $77,000 will pay less property tax compared to the current flat 4 per cent rate.
This is because the first $6,000 of AV is exempt from property tax. Even with future increases in AV, most owner-occupied properties will still pay lower tax under the new regime so long as their AV does not exceed $77,000. (As a reference, all HDB flats have AVs of not more than $11,000 currently.)
Only about 3 per cent of private owner-occupied residences now have AVs in excess of $77,000. Even then, our property tax rates will remain lower than in most international cities, even for the high-end properties.
Deanna Choo
Director (corporate communications)
IRAS
Source : Business Times – 4 Mar 2010
Related:
Property tax gets a welcome tweak
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