With the increasing market rentals, the Inland Revenue Authority of Singapore (IRAS) revised the Annual Values of HDB flats and private residential properties upwards in 2022. It was the first time since 2017 that the annual values of HDB flats were revised.
As a result of the increase in the Annual Values of properties, most homeowners will have to pay more in property taxes. The good news? It will affect homeowners with private properties of an annual value above $30,000.
It is good to know the Annual Value of a home, especially if you are about to buy or rent that property. However, there is a lot of confusion around the Annual Value of a property.
Let us show how a property’s annual value is derived, where you can check the annual value of your home and in what ways the government uses the annual value. In the end, we will also briefly discuss how your property’s annual value affects the property taxes that you will or are already paying.
The Annual Value, or AV, is the estimated gross rental income a homeowner could earn annually if they rent out the property. It is determined by deducting an allowance for furniture, furnishings and maintenance costs.
Annual Value = Rental value – (Furniture + Furnishings cost + Maintenance fee)
Overall, AV refers to the annual passive income from the property if you were to rent it out for the whole year.
The Inland Revenue Authority of Singapore (IRAS) determines the annual value of properties in Singapore. According to IRAS, the property’s annual value is determined based on the average of the estimated gross annual rent of surrounding properties within the same area. Hence, when the rental value is up, the AV rates go up.
Suppose you own a 4-room flat but are not renting it out. But apparently, some other 4-room flat owners within the same condo are renting out their units. One owner may be renting his 4-room flat at $2,400, one at $1,900, and another at 2,100. In this case, IRAS would estimate the AV of your 4-room flat by taking an average of the annual rents of all 4-room flats near you.
In general, the property’s AV is updated annually by IRAS to reflect the changes in the housing market rental. Please note that the property’s annual value is an “estimation” and does not depend on the actual rental income received from the property.
Apart from rentals of similar or comparable properties in the vicinity, IRAS takes some other factors into account in determining your property’s AV. The factors include:
Knowing your property’s annual value is important. The AV of property impacts the property tax you fork out annually. A higher annual value means a high property tax.
Especially if you plan to be or are already a landlord, you must think through property taxes as an expense in your property investment plan. But there’s more to it than that.
Apart from your earned income, your property’s annual value is used by the government as a gauge to assess the financial wealth of a household. Let’s see how!
Annual Value is a key criterion in finding out your eligibility for various government benefits like GST Voucher Scheme and Self-Employed Person Income Relief Scheme (SIRS) for Singaporeans. It enables the government to give the best possible support to those who need it the most. Interestingly, the property annual value is used to check not how much you need to ‘pay’ but how much you can ‘take’.
Here are two of those government aid schemes discussed briefly below.
GST Voucher Scheme. If you are a Singaporean citizen of at least 21 years and do not own more than one property, you are eligible to receive a cash GST voucher.
If the annual value of your property is $13,000 or less, you will be entitled to larger payouts in the Cash and MediSave components of the voucher. Since the median annual value for most HDB properties is less than $13,000 (see table below), HDB residents will be eligible for the higher tier.
Those with property annual values of $21,000 and above are automatically ineligible for receiving GST vouchers.
Self-Employed Person Income Relief Scheme (SIRS). Launched as part of the COVID-19 relief measures, the Self-Employed Person Income Relief Scheme (SIRS) allows self-employed people to receive up to three cash payouts of $3,000 each, quarterly.
Please note that the property annual value threshold is set to $21,000, covering more than 80% of Singaporeans with taxable income.
Let’s understand this with an example.
Suppose you own a fully furnished 1200 sq. ft. 3-bedroom condo in a mature estate in Singapore, and you rent out the whole unit at $3,600 a month. The gross annual rent you will earn would be $3,600 x 12 months = $43,200.
After considering the market rentals of similar or comparable properties within the vicinity, roughly of the same floor area, IRAS then discounts the cost of furnishing, furniture and maintenance fees. Let’s say the actual value per month then comes out to be approximately $1,900. Hence, the resulting annual value of your condo could be around $22,800 ($1,900 x 12 months).
Whether the property is owner-occupied, rented out or vacant, the AV of a property does not change. However, a property would be taxed less if owner-occupied rather than left vacant or rented out.
Please note that the IRAS does not publish its methodology for calculating the cost of furniture, furnishings and maintenance fees, which needs to be deducted from the gross annual rent. Therefore, it is best to check the AV of your property on the IRAS website rather than manually checking what your neighbours are charging for rent.
Since IRAS makes the final decision on the AV of your property, you can check your property’s Annual Value online at the IRAS MyTax Portal and navigate to “View Property Portfolio”.
If you want to know the AV of a friend’s or relative’s property, you can! In fact, you can check the AV of any property and the name(s) of the property owner(s) that you don’t own on the IRAS website, for a fee of $2.50.
The Singapore government also publishes the median annual values for all types of residential property in Singapore in case you want a rough and ready estimate of the typical values.
Check out the median AV for HDB flats and private residential properties in Singapore for 2021.
|HDB flat type||Median annual value|
|1 or 2 Room||$5,340|
|Executive & other HDB types||$11,340|
|Private property type||Median annual value|
|Non-landed (includes Executive Condominiums)||$23,400|
|Landed private property||$37,200|
Did you notice the wide gap between the median annual values for HDB flats and private residential properties?
The annual value of $10,000 or less will cover those who stay in 1-, 2- and 3-room HDB flats. The annual value between $10,000 and $15,000 will cover most of those staying in 4-room and 5-room HDB flats along with Executives and other types of HDB flats. The annual value of more than $25,000 includes the top 10% of the population living in more valuable private properties.
The annual value of properties in Singapore changes as the market rental prices fluctuate over time. When locations surrounding a property improve and market rent prices increase, the property’s annual value will also rise. Similarly, if the market rentals fall, the annual value of a property also goes down.
Usually, IRAS would review the AV of properties annually to reflect changes in the rental market and inform property owners of any revision to their property’s AV.
Your property’s annual value may change if your residential property has undergone physical changes. For example, a major renovation or upgrade in your HDB block or condominium could significantly impact its rental value. In this case, IRAS will review and revise your AV from the date of the change.
If you disagree with IRAS’ proposed assessment of your property’s AV for some reason, you can object to the annual value.
For this, you will need to file an objection online with IRAS within 30 days from the date of the Valuation Notice. A valuation notice is sent by IRAS to the homeowners informing them of any revision in their property’s AV.
You may also electronically file an objection to your property’s AV as shown in the IRAS’ property Valuation List at any time in the year (before 31 December of the year of the VL) if you can show the market values have dropped below the AV.
Make sure you include the valuation notice number and state your desired AV, its effective date and the valid grounds for your objection.
If you are unsatisfied with the outcome of the filed objection, you may still choose to appeal further to the Valuation Review Board within 30 days of the notice regarding the outcome of your objection. For further appeal, you will have to pay a fee of:
Please note that you are liable to pay the property tax even if you wish to appeal further or await an outcome to the filed objection.
When you own a property in Singapore, you pay associated property taxes. The property tax payable is derived by multiplying the annual value of the unit with the relevant property tax rates.
Annual Value (AV) x Property tax rate = Property tax payable
For instance, if the annual value of your property is $25,000 and your tax rate is 10%, you would pay $2,500 ($25,000 x 10%)
A property’s annual value allows you to find out how much property tax you must pay. Just like your employment income, the higher the annual value of the property you own, the higher the property tax you might have to fork out.
This is also affected by whether the property is owner-occupied or not, as well as the type of property.
For owner-occupied property, the tax rate is lower.
|Annual Value||Effective from 1 Jan 2015||Property Tax Payable|
|First $8,000 Next $47,000||0% 4%||$0 $1,880|
|First $55,000 Next $15,000||– 6%||$1,880 $900|
|First $70,000 Next $15,000||– 8%||$2,780 $1,200|
|First $85,000 Next $15,000||– 10%||$3,980 $1,500|
|First $100,000 Next $15,000||– 12%||$5,480 $1,800|
|First $115,000 Next $15,000||– 14%||$7,280 $2,100|
|First $130,000 Above $130,000||– 16%||$9,380|
Fig. Owner-occupier tax rates
For example, a private property with an annual value of $24,000 will pay a property tax of $640. A 5-room flat with an annual value of $13,200 will pay an annual property tax of $208.
However, according to Budget 2022 announcements, property tax rates for owner-occupied residential properties will be adjusted in 2023 and then again in 2024. The hike in property tax rates will affect properties with an annual value of more than $30,000 as well as all non-owner occupied properties.
Here’s the breakdown of the property tax rates for owner-occupied properties for 2023 and 2024:
|Annual Value||Effective from 1 Jan 2023||Property Tax Payable|
|First $8,000 Next $22,000||0% 4%||$0 $880|
|First $30,000 Next $10,000||– 5%||$880 $500|
|First $40,000 Next $15,000||– 7%||$1,380 $1,050|
|First $55,000 Next $15,000||– 10%||$2,430 $1,500|
|First $70,000 Next $15,000||– 14%||$3,930 $2,100|
|First $85,000 Next $15,000||– 18%||$6,030 $2,700|
|First $100,000 Above $100,000||– 23%||$8,730|
|Annual Value||Effective from 1 Jan 2024||Property Tax Payable|
|First $8,000 Next $22,000||0% 4%||$0 $880|
|First $30,000 Next $10,000||– 6%||$880 $600|
|First $40,000 Next $15,000||– 10%||$1,480 $1,500|
|First $55,000 Next $15,000||– 14%||$2,980 $2,100|
|First $70,000 Next $15,000||– 20%||$5,080 $3,000|
|First $85,000 Next $15,000||– 26%||$8,080 $3,900|
|First $100,000 Above $100,000||– 32%||$11,980|
On the other hand, if you don’t live in the said property and rent it out, you have to pay a high property tax.
|Annual Value||Effective 1st Jan 2015||Property Tax Payable|
|First $30,000 Next $15,000||10% 12%||$3,000 $1,800|
|First $45,000 Next $15,000||– 14%||$4,800 $2,100|
|First $60,000 Next $15,000||– 16%||$6,900 $2,400|
|First $75,000 Next $15,000||– 18%||$9,300 $2,700|
|First $90,000 Above $90,000||– 20%||$12,000|
Fig. Non-owner-occupier residential tax rates
A non-owner-occupied private property with an annual value of $24,000 will pay a property tax of $2,400. A non-owner-occupied 5-room flat with an annual value of $13,200 will pay an annual property tax of $1,320.
Here are the property tax rates for non-owner-occupied properties, effective 1 January 2023:
|Annual Value||Effective 1st Jan 2023||Property Tax Payable|
|First $30,000 Next $15,000||11% 16%||$3,300 $2,400|
|First $45,000 Next $15,000||– 21%||$5,700 $3,150|
|First $60,000 Next $60,000||– 27%||$8,850|
|Annual Value||Effective 1st Jan 2024||Property Tax Payable|
|First $30,000 Next $15,000||12% 20%||$3,600 $3,000|
|First $45,000 Next $15,000||– 28%||$6,600 $4,200|
|First $60,000 Next $60,000||– 36%||$10,800|
So, you can figure out that property taxes can become a significant expense, especially if you are a homeowner not living in your unit.
Some residential non-owner-occupied properties fall within a property tax exclusion list and are taxed at a fixed 10%. These include:
When it comes to property tax and government aid, the Annual Value of a residential property is a common magic number both homeowners and the Singapore government look at. Although AV is a reflection of the property you live in, it is also relevant to other areas of your life.
If you have questions about your Property’s Annual Value and how it impacts your home loan in Singapore, Dollarback Mortgage can give you the advice and clarity you need. Not planning ahead for property tax when taking up a home loan will haunt you for years!
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