The Singapore government has recently announced a one-off rebate for property taxes in 2025, which will benefit both HDB flats and private residential properties. The rebate will be 20% for owner-occupied HDB flats and 15% for owner-occupied private residential properties. However, the rebate for private residential properties will be capped at $1,000.
Property tax is calculated based on a property’s annual value, which is the estimated rent a property can fetch in a year if it were to be rented out. The government has also announced an increase in the annual value bands of owner-occupier’s residential property tax rates, which will take effect on January 1, 2024 as part of Budget 2024.
This move by the government is aimed at providing relief for Singaporeans who are concerned about the cost of living. According to Lee Sze Teck, a senior director of data analytics at Huttons Asia, the annual value of private properties is expected to remain stagnant this year due to the low growth in private residential rents. On the other hand, the annual value of HDB flats is expected to increase by 4%.
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The one-off property tax rebate will help to cushion any impact from the increase in annual value for HDB owners. For example, if a HDB flat has an annual value of $30,000, the property tax payable next year will be $720. With the rebate, the owner will only need to pay $576, resulting in a savings of $144.
Similarly, some private residential property owners will also benefit from the one-off rebate. For instance, if the annual value of a private property is $85,000, the property tax payable will be $5,760. With the 15% rebate capped at $1,000, the owner will only have to pay $4,896, saving $864 in property taxes.
However, Lee emphasizes that property tax rebates have been offered in the past and they do not diminish the appeal of investing in residential properties in Singapore. The main allure of investing in residential properties in Singapore lies in the potential for capital appreciation, which far outweighs any increase in property tax.