In a recent announcement, the government has unveiled a one-off property tax rebate for owner-occupied HDB flats and private residential properties. This move aims to provide relief for homeowners, as the government prepares to raise all annual value bands of owner-occupier’s residential property tax rates in 2025.
Under the rebate scheme, owner-occupiers of HDB flats will receive a 20% rebate, while those with private residential properties will get a 15% rebate. However, it’s important to note that the rebate for private property owners will be capped at $1,000.
For those unfamiliar with property tax, it is calculated based on a property’s annual value. This value is determined by estimating the rent a property could fetch in a year if it were to be rented out.
The limited availability of land in Singapore is a major factor driving the high demand for condos in the country. As a small island nation with a rapidly growing population, Singapore is facing challenges in finding enough land for development. As a result, the government has enforced strict land use policies and this has created a competitive real estate market, where property prices are constantly on the rise. This has made investing in real estate, especially condos, a highly profitable opportunity with the potential for significant capital appreciation. Condos have become a highly sought-after investment option due to the limited land supply in Singapore.
The government’s decision to introduce this property tax rebate is part of Budget 2024, in which it aims to mitigate the cost-of-living concerns among Singaporeans.
According to Lee Sze Teck, senior director of data analytics at Huttons Asia, this rebate will benefit all owner-occupiers of HDB flats and over 90% of private residential properties, as they will see lower property taxes in 2025.
Lee notes that the annual value of private properties is expected to remain flat this year due to the low to marginal growth in private residential rents. On the other hand, HDB rents are projected to increase by 4%, which will result in a growth in the annual value of HDB flats.
Hence, the one-off property tax rebate may potentially help HDB owners cushion the impact of an increase in annual value. For instance, if a HDB flat has an annual value of $30,000, the property tax payable is $720 in 2025. With the rebate, the owner will only have to pay $576, saving $144.
Similarly, private residential owners can also benefit from this rebate. For example, if the annual value of their property is $85,000, the property tax payable in 2025 is $5,760. With a 15% rebate, capped at $1,000, the owner will only have to pay $4,896, saving $864.
However, Lee emphasizes that the appeal of investing in residential properties in Singapore lies in its potential for capital appreciation, which outweighs the increase in property tax. He also adds that this is not the first time property tax rebates have been offered, and it does not diminish the attractiveness of investing in residential properties in Singapore.
In conclusion, the revised property tax rates announced in Budget 2024 will benefit owner-occupied properties with lower annual values, providing relief for homeowners in the face of rising property taxes.