15 Oct 2008
I refer to Mr. Manmohan Singh's letter 'Surprised by big increase in property tax' (TNP, Oct 10).
Property tax is based on the Annual Value (AV) of a property. The AV is the estimated annual rent that the property can fetch if it was rented out. Property Tax is levied irrespective of whether the property is owner-occupied or rented out, and even if it is left vacant. For owner-occupied properties, the tax rate is at the concessionary rate of 4%, while let-out properties are taxed at 10%. Moreover, owners of owner-occupied residential properties will enjoy an annual rebate of up to $100 or the actual tax payable (whichever is lower) for 2008 and 2009. For owner-occupied properties with AVs below $10,000, owners will also get to enjoy the on-going property tax rebates of $25-$150 before the annual rebate.
IRAS reviews the AVs of properties annually to ensure that they are in line with the prevailing market rents of comparable properties. If the rentals of the comparable properties rise, the AVs of the property concerned will be raised. Conversely, if rentals decline, AVs will be reduced.
In Mr Singh's case, the AV for his private property was last revised in 2007 and recently revised in Sep 2008. The revision is well-supported by 2008 rentals that increased by about 60% when compared to 2007 rentals for similar properties in the same condominium development. We will continue to monitor the rental market closely and make adjustments to the AV in line with the prevailing market rents.
We would like to thank Mr. Singh for the opportunity to clarify.
Director (Corporate Communications Branch)
Inland Revenue Authority of Singapore