The Singapore government has announced plans to offer a one-time property tax rebate of 20% for owner-occupied HDB flats and 15% for owner-occupied private residential properties in 2025. This comes in light of the impending increase in annual value (AV) bands for owner-occupied residential properties, set to take effect on January 1, 2024, as part of Budget 2024. Additionally, the rebate for owner-occupiers of private residential properties will be capped at $1,000.
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Property tax is determined based on a property’s AV, which is the estimated annual rent it can generate if rented out. As per the government, the rebate aims to mitigate cost-of-living concerns for Singaporeans and is expected to benefit over 90% of private residential property owners and all HDB flat owners.
Lee Sze Teck, senior director of data analytics at Huttons Asia, predicts a flat AV for private properties due to minimal growth in private residential rents this year. However, HDB rents are expected to increase by 4% in 2021, resulting in a rise in AV for HDB flats. The one-time property tax rebate may help cushion the impact of this increase for HDB owners. For instance, if the AV of an HDB flat is $30,000, the property tax payable in 2025 would be $720. However, with this rebate, the owner will only need to pay $576, a savings of $144.
Similarly, some owners of private residential properties may also benefit from the rebate. For example, if the AV of their property is $85,000, the property tax payable in 2025 would amount to $5,760. With the 15% rebate, capped at $1,000, the owner would only need to pay $4,896, resulting in a savings of $864.
Lee emphasizes that while this one-time rebate is beneficial, it does not reduce the appeal of investing in residential properties in Singapore. The main appeal of such investments lies in the potential for capital appreciation, which far outweighs the increase in property tax.
All in all, the government’s decision to offer a one-time property tax rebate aims to ease the financial burden on homeowners and support their goal of alleviating cost-of-living concerns.