Determining AV of Buildings
The AV of buildings is the estimated gross annual rent of the property if it were to be rented out, excluding furniture, furnishings and maintenance fees. It is determined based on estimated market rentals of similar or comparable properties and not on the actual rental income received.
Example 1: AV of Flat
Please see case study of AV of residential properties (PDF, 58KB) for a better understanding on how AV is determined.
The property tax payable is derived by subsequently applying the relevant tax rate (%) on the AV.
Factors Considered in Determining AV of Buildings
In determining the AV of a building, IRAS considers:
- rentals of similar or comparable properties in the vicinity;
- the size of the property;
- location of the property;
- the condition of the property; and
- other relevant physical attributes.
Determining AV of Land and Development Sites
The AV of land and development sites is determined at 5% of the estimated freehold market value. This applies to both vacant land and land under construction.
Example 2: AV of Land and Development Sites
The freehold market value of your land is $5,000,000.
Annual Value = 5% X $5,000,000 = $250,000
Determining AV of Specialised Properties
Specialised properties are properties that are rarely rented out such as refineries, petrochemical and power plants.
The AV of specialised properties may be assessed using the following methods:
The AV of the property may be determined based on 5% of the freehold capital value.
Other Valuation Methods
The AV of the property may be determined using methods such as Profit's Method and Contractor's Test. This involves using costs and receipts to estimate the market rents of the properties.
For hotels (PDF, 152KB) and ports, their AV will be determined using the Statutory Gross Receipts Method.
For more details, please refer to the following e-Tax Guides:
- Tax Guide on Treatment of Fixed Machinery under the Property Tax Act (PDF, 84KB)
- Investor's Guide to Property Tax (PDF, 125KB)
Review of the AV
IRAS reviews the AV of properties yearly to reflect the changes in the market rental values of comparable properties. The AV will be amended if the latest market rent data no longer support your existing AV.
If your property undergoes physical change that could materially affect its rental value, IRAS will also revise your AV from the date of change.
Checking the AV of your Property
You can check the AV of your property using our 'View Property Dashboard' digital service. All AVs shown are as at current date.
Please note that if there is any change to the AV stated in your Jan bill, it will only be reflected on the digital service from the effective date of change.
You can also check the AV of any property using the Check Annual Value of Property at a fee of $2.50 per search.
Assessment of Annual Value (AV)
My property is not rented out. How does IRAS estimate its rental value in order to arrive at the AV?
IRAS would analyse the rents of comparable or similar properties that have been rented out and make adjustments to the values to account for differences in location, size, conditions and other physical attributes.
Can the AV be reduced to take into account the owner's expenses such as interest cost, utilities, insurance and taxes?
No, such expenses cannot be deducted for property tax purpose. AV is defined as the estimated gross annual rent of a property.
My actual rent is $2,500 per month. However, based on the annual value it is $3,000 per month. How does IRAS determine the Annual Value?
The AV could be higher or lower than the actual rental as the AV reflects the market rent at the time IRAS reviews the AV, whereas the actual rental could have been fixed earlier.
Why is IRAS using rentals instead of sale prices to determine AV?
IRAS uses the annual market rent of comparable properties to determine the AV instead of transacted sale prices because:
- There are generally more rental transactions than sales transactions. A higher number of transactions gives a more accurate picture of market activity.
- The movements in sale prices are more volatile than rentals prices. Hence, using rental transactions to derive the AV helps to keep property tax more stable for property owners. Other countries like Hong Kong and Malaysia also adopt the same practice of using market rents to determine the AV.
- Using historical purchase price to determine AV would be inequitable towards newer owners. This is because the prices of similar and comparable properties can change over time. For instance, newer owners may have a higher AV than those who bought properties in the past if properties prices increase over time.
To give me an idea of whether the AV on my property is fair, where can I find information on private residential properties or HDB flats that are let?
Can I object to the AV?
You can object to the AV and/or its effective date within 30 days from the date of the Valuation Notice . If you do not receive the Valuation Notice, you can also object to the AV at any time in the year if you can show that the market values have dropped to below the AV. You cannot, however, object to the tax rates.
If my objection is disallowed, can I appeal?
Yes. You can appeal to the Valuation Review Board (VRB) within 30 days of the notice on the outcome of your objection. You need to pay the following fees to VRB:
$50 for a residential property taxed at owner-occupier tax rates;
$200 for any other property.
In your appeal, you need to state the grounds of your appeal and indicate whether you are represented by any agent.