Property Tax Rates Review03 Mar 2023
Parliamentary Question by Ms Joan Pereira:
To ask the Deputy Prime Minister and Minister for Finance whether the Ministry will consider reducing the property tax rates for owner-occupied private residential properties occupied by elderly retirees who have been unduly affected by the escalating rental of neighbouring units, which disproportionately affects their properties’ annual value.
Parliamentary Question by Mr Yip Hon Weng:
To ask the Deputy Prime Minister and Minister for Finance (a) for the past three years, what is the annual average rate of increase of property tax for owner-occupied private properties in both prime and non-prime locations respectively; (b) whether the annual property tax computation is influenced by the use of neighbouring properties for rental income; and (c) whether the Ministry will review the property tax computation for prime locations so that owners of these owner-occupied homes, especially retirees, are not unfairly penalised.
Parliamentary Reply by Senior Minister of State fo Finance, Mr Chee Hong Tat:
Mr Speaker, may I have your permission to answer questions 3 and 4 together?
Property tax (PT) is our principal means of taxing wealth. PT payable is based on the applicable PT rate, applied to the Annual Value (AV) of the property, where AV is a proxy for the property value and thus the owner’s wealth.
In line with the wealth tax intent of PT, the PT on residential properties is taxed on a progressive schedule. Properties with AVs of up to $8,000 pay no PT, while properties with higher AVs pay PT at progressively higher rates of taxation. Owner-occupied residential properties enjoy concessionary PT rates, and are taxed at rates lower than non-owner-occupied ones.
Over the years, the Government has received feedback, including from Members from both sides of this House, to enhance our wealth taxes. This is what we have been doing. As announced in Budget 2022, PT rates have been raised for higher-end owner-occupied residential properties with AVs above $30,000 in 2023 and 2024. The new rates affect less than 1 in 10 owner-occupied residential properties.
The AV is a proxy of the value of a property and is determined based on the rental transactions for comparable properties, with similar attributes such as location, age and condition. A property that earns more rental income has greater value, and therefore the AV and the PT payable will be higher.
The median PT for owner-occupied private residential properties in Singapore grew at a CAGR of around 7% from 2020 to 2023. The growth rate is similar for owner-occupied private residential properties within and outside the Central Region.
I understand the Members’ concerns that some retirees may face financial difficulties. The Government remains committed to supporting retirees. We do so, not by lowering PT rates for residential properties owned by retirees, but by supporting our seniors in other ways. We have various schemes to help retirees, whether living in private residential properties or HDB flats. For example, through the Assurance Package (AP), seniors living in private properties can receive AP Cash, AP MediSave and the Cost-of-Living Special Payment.