Property tax, which is a wealth tax, is imposed under the Property Tax Act on immovable properties in Singapore. It is payable in advance each year and is computed by applying the applicable tax rate to the annual value of the property.
The Annual Value of a property is generally derived based on the estimated annual rent that it can fetch if it were rented out. In determining the Annual Value of a property, IRAS will consider the rentals of similar properties in the vicinity, size and condition of the property, and other relevant factors. The Annual Value of a property is determined in the same manner regardless of whether the property is let-out, owner-occupied or vacant.
The Annual Value of land is determined at 5% of the market price of the land. When a building is demolished, the Annual Value of the land is assessed by this method.
Property Tax on Residential Properties
A progressive property tax regime for residential properties was introduced in Budget 2010 and enhanced in Budget 2013. Prior to that, property tax was levied at a flat rate for all residential properties. A more progressive tax regime on residential property is socially equitable since taxpayers with more valuable residential properties pay higher property tax. Such a tax structure will not hurt the competitiveness of our overall tax regime or reduce the incentives for enterprise.
Property Tax on Non-residential Properties
Non-residential properties, including industrial and commercial properties, are taxed at a single flat rate. The property tax rates can be found on IRAS’ website at www.iras.gov.sg.
Removal of the Property Tax Refund Concession for Vacant Properties
The property tax refund for vacant residential and non-residential properties was removed from 1 January 2014. Property tax is a tax on wealth and should not depend on whether the property is vacant or the reason for it being vacant.
The removal of the property tax refund aligned the property tax regime with the policy intent of property tax, which is to tax property wealth irrespective of whether it is occupied or not. This also ensures consistency in the tax treatment of all vacant properties. More details on the tax treatment can be found on IRAS’ website.