Revised Annual Values For HDB Flats From 1 January 2010 And A New Property Tax Rebate For HDB Owner-Occupiers in 2010

The Inland Revenue Authority of Singapore (IRAS) will be raising the Annual Values^[1] (AVs) of all HDB flats with effect from 1 January 2010. To help HDB homeowners adjust to the AV increase, the Government will grant a one-off property tax rebate to all HDB owner-occupiers for the property tax payable in 2010.

AV increase for HDB flats

IRAS reviews the AVs of all properties, including HDB flats, annually to ensure that they reflect prevailing market rental values for the purpose of determining property tax.

The last AV revision for HDB flats was however done two years ago on 1 January 2008, based on rental values in 2007.  AVs for HDB flats were not revised on 1 January 2009, notwithstanding that HDB rentals had increased significantly (by between 31% and 37%) in 2008 relative to 2007. The adjustment in AVs was deferred in view of the uncertainty in market rental trends in the midst of the economic recession. There was evidence of declines in rental values from late 2008, with the risk of further significant declines in 2009 given the negative economic outlook at the time.

HDB rentals have stabilised after a moderate decline from late 2008 to the middle of 2009, and have since begun to rise. As a result, current values of HDB rentals, as well as HDB resale prices, are still significantly higher than levels observed in 2007. The AVs of HDB flats will therefore have to be adjusted, beyond the last revision in January 2008. IRAS will therefore revise the AVs of all HDB flat types with effect from 1 January 2010.

New 2010 Property Tax Rebate for HDB Owner-Occupiers

There are two existing property tax rebates; the $100 rebate and the 40% rebate that were provided as part of Budgets 2007 and 2009 respectively. They are both scheduled to expire in 2009.

To help HDB homeowners adjust to the January 2010 AV increase, the Government will grant a new property tax rebate to all HDB owner-occupiers for property tax payable in 2010. This new rebate granted to HDB owner-occupiers will apply to property tax payable in 2010 after deducting the 1994 GST Rebate^[2], which is available to all residential property owner-occupiers.

The new rebate is set at 50% of the property tax payable, and capped at $120.

To provide more help to owner-occupiers of smaller HDB flats, the rebate will be the lower of $50 or the actual property tax amount. This means that flats with a property tax of $50 and below^[3] will not need to pay property tax in 2010. More details are in Table 1 as follows:

Property Tax Changes for HDB Flat Owners

With the new property tax rebate for HDB owner-occupiers and the ongoing 1994 GST Rebate, all 1- and 2-room HDB owner-occupiers will continue to pay zero property tax in 2010.

For average 3-room HDB owner-occupiers, the increase in property tax in 2010 after deducting the special rebates will be $72 for the year as a whole. For 4-room HDB owner-occupiers, the average tax increase will be $97 for the year as a whole. For 5-room HDB owner-occupiers, the average tax increase will be $107 for the year as a whole, and for Executive HDB owner-occupiers, $103. Appendix 2 (1,663 KB) shows how the property tax for 2010 is computed.

Combined Valuation Notice and Property Tax Bill

Owners of all HDB flats will receive their valuation notices and property tax bills by 1 January 2010. Owners will also receive an explanatory guide on “Property Tax on HDB Flats for 2010” (see Appendix 3 (1,663 KB)) - the guide explains how the property tax payable is calculated and how payment can be made.

Property Tax for 2010 is payable by 31 January 2010

IRAS encourages HDB flat owners to join the GIRO payment scheme to enjoy up to 12 interest-free monthly instalments. The GIRO application forms can be downloaded from www.iras.gov.sg and the average processing time is two weeks. Customers of DBS/POSB and OCBC can also apply for GIRO online via Internet Banking. Alternatively, taxpayers are encouraged to pay via eNETS, Internet Banking, AXS, ATM, S.A.M^TM, Singapore Post, vPOST or Phone-Banking. Cheques/Cashier's Order may be addressed to The Comptroller of Property Tax (55 Newton Road, Singapore 307987).

Information on payment modes and details of property tax and AV revision are available at www.iras.gov.sg. Taxpayers with enquiries may email IRAS at propertytax@iras.gov.sg or call 1800-356 8300.

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^[1] The AV is the expected market rent that a property would fetch if it were rented let out on an unfurnished basis. The basis for determining the AV of a property is the same whether the property is rented out, occupied by the owner, or left vacant. The property tax rate is currently set at 10% of the AV of the property. For owner-occupied residential properties including HDB flats, owners pay a concessionary property tax of 4% of the AV.

^[2] Owner-occupiers of all residential properties will continue to enjoy the property tax rebate that has been given since 1994 when GST was first introduced ( Appendix 1 (1,663 KB) shows the structure of the GST Rebate).

^[3] Property tax payable after deducting the 1994 GST rebate.