Source : The Business Times, April 9, 2009
The Inland Revenue Authority of Singapore (IRAS) yesterday said it accelerated its annual review of properties to take into account the recent declines in the rental market, and has so far reduced the annual values (AV) of over 100,000 private properties.
A total of 116,200 private residential, commercial and industrial properties were reviewed in the first three months of this year, up from 31,300 properties in the same period last year.
Iras said in a press statement that 99 per cent (115,400) of properties that were reviewed had their AV lowered. This, together with the 40 per cent property tax rebate announced in Budget 2009, will result in the owners of these properties paying 45 to 60 per cent less property tax.
The AV of properties are reviewed yearly by Iras to ensure that they reflect prevailing rental market values for property tax computation.
AV is determined based on the estimated annual market rent the property would fetch if it were let out unfurnished. The property tax rate is 10 per cent of the AV of the property. For owner-occupied residential properties, the rate is 4 per cent.
Of the properties whose AV have been reduced, about 84,900 were private residential properties, while 25,300 were offices and industrial developments.
Iras said some 99 per cent of private residential properties had their AV reduced by between 5 per cent and 20 per cent.
For commercial properties, about 92 per cent of all offices in Singapore had their AV lowered by 10-35 per cent. In the industrial sector, almost all (98 per cent) of the properties assessed had their AV reduced by 5 to 30 per cent.
Iras said yesterday that by Q3 2009, all private properties, including retail properties, would be reviewed.
As for HDB flats, based on current market rentals, their AV should be higher than the existing AV. But with the uncertainties in the HDB rental trends in the coming months, Iras has kept the AV of HDB flats unchanged for 2009. It will however continue to monitor the rental market closely.
Property tax reduced due to real estate slump
OWNERS could pay up to 60 per cent less property tax after the taxman reduced the value of tens of thousands of sites following the real estate sector's slump.
The Inland Revenue Authority of Singapore (Iras) recently held its annual review - brought forward in the light of dire market conditions - which found that 99 per cent of assessed properties had their values reduced.
Together with the 40 per cent property tax rebate announced in January's Budget, owners of these properties will now pay 45 per cent to 60 per cent less property tax.
The values of properties are reviewed by Iras annually to ensure that they reflect prevailing rental market rates for property tax assessment.
Falling property prices and rents had prompted calls for Iras to also reduce property tax in line with market conditions.
The tax authorities reviewed a total of 116,200 properties in the first quarter.
Of the 84,900 private residential sites assessed, 99 per cent had values reduced by between 5 per cent and 20 per cent.
The total reduction in property tax payable for these homes is about 45 per cent to 50 per cent.
Of the 15,600 offices reviewed, 92 per cent had their annual values lowered by between 10 per cent and 35 per cent. This translates to a total reduction of tax liability by 45 per cent to 60 per cent.
And 98 per cent of the 9,700 industrial properties reviewed suffered a loss in value of 5 per cent to 30 per cent, translating to a total reduction of tax liability by 45 per cent to 60 per cent.
Based on current rentals, the annual values of HDB flats 'should be higher than the existing 2009' ones, but Iras is keeping them unchanged 'in view of the poor economic conditions and uncertainties in the HDB rental trends in the coming months'.
The taxman said that it would review the values of all private properties, including retail ones, by the third quarter.
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