SINGAPORE — The Government is expected to collect S$600 million more in residential property tax revenue this year compared to 2023 — almost 58 per cent higher than the S$380 million increase originally projected in Budget 2022.

This increase is largely due to higher annual values that arose from higher market rentals for residential properties, said Second Minister for Finance Chee Hong Tat in Parliament on Tuesday (Feb 6).

Mr Chee was responding to questions from Leader of the Opposition Pritam Singh, who asked how much additional property taxes the Government expects to collect in 2024 following the increase in property tax rates that took effect on Jan 1 this year.

The increase was the second and final step of the property tax revisions announced in Budget 2022, as part of the Government’s move to raise wealth taxes for residential properties and cars over time.

For owner-occupied residential properties, the property tax for the portion of a home's annual value in excess of S$30,000 was increased from the previous range of between 4 per cent and 16 per cent in 2022 to between 6 per cent and 32 per cent this year.

Finance Minister Lawrence Wong had said in 2022 that when fully implemented, the changes will raise Singapore’s property tax revenue by about S$380 million a year.

A property’s annual value is the estimated gross annual rent if it were to be rented out — excluding furniture, furnishings and maintenance fees.

On how the annual value of a property is assessed, Mr Chee said that the Inland Revenue Authority of Singapore (Iras) takes reference from rental transactions for similar properties over the course of the year.

"Iras also takes into account the properties’ attributes such as location, age, land and floor area, improvement works last done, and whether there are specific features like swimming pools," said Mr Chee.

The minister added that Iras excludes "outliers" in its assessment of annual values — properties in the neighbourhood with "particularly high" rentals — and will instead look at general market trends.

REBATES WILL 'CUSHION' INCREASE IN TAXES

For 2024, most owner-occupied residential properties saw the annual values of their properties increase by more than 20 per cent due to the increase in market rentals from 2022 to 2023, Mr Chee said.

To cushion the impact of the tax increase on owner-occupiers, he said that the Government has provided a property tax rebate of up to 100 per cent, capped at S$1,000, for owner-occupied properties. 

With the rebates, Mr Chee added that owner-occupiers of HDB one- and two-bedroom flats continue to pay no property tax, and that the average tax increase for owner-occupiers of other HDB flat types is less than S$3 per month.

For half of private property owner-occupiers, this increase was less than S$15 per month.

Mr Lim Biow Chuan, Member of Parliament for Mountbatten Single Member Constituency, asked Mr Chee if the Ministry would consider reviewing the "hefty" tax increase on owner-occupied properties, citing the fact that many retirees who live in such properties do not have a source of income.

He also asked if the current cap of S$1,000 for rebates would be increased.

"Certainly, I think we empathise with the situation that the retirees are in because they moved into the houses many years ago," Mr Chee said in response.

"We are prepared to consider… to take a look and see what we can do to help not just seniors but also other families who are facing a large increase in their property tax bills."