The government has recently announced a new measure to provide relief for homeowners in Singapore. In 2025, a one-off property tax rebate of 20% will be given to owner-occupied HDB flats, while a 15% rebate will be given to owner-occupied private residential properties. However, the rebate for private residential properties will be capped at $1,000.
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Property tax is calculated based on a property’s annual value, which is the estimated rent the property can generate in a year if it were to be rented out. This measure was introduced by the government on November 29, in preparation for the upcoming increase in annual value bands for owner-occupier residential property tax rates on January 1 under Budget 2024.
The government estimates that this measure will result in lower property taxes for more than 90% of owner-occupied HDB flats and private residential properties. This aims to alleviate concerns about the cost of living among Singaporeans.
According to Lee Sze Teck, senior director of data analytics at Huttons Asia, the annual value of private properties is expected to remain flat this year due to low or marginal growth in private residential rents. On the other hand, he predicts a 4% increase in HDB rents, which will lead to a rise in the annual value of HDB flats.
The one-off property tax rebate may help cushion the impact of any increase in annual value for HDB owners. For instance, if a HDB flat has an annual value of $30,000, the property tax payable in 2025 would be $720. With the rebate, the owner will only need to pay $576, saving $144.
Similarly, some owner-occupiers of private residential properties may also benefit from the 15% property tax rebate, with a cap of $1,000. For example, if the annual value of a property is $85,000, the property tax payable would be $5,760. With the rebate, the owner would only need to pay $4,896, saving $864.
However, Lee notes that property tax rebates have been offered before and do not affect the attractiveness of investing in residential properties in Singapore. The appeal of investing in residential properties lies in the potential for capital appreciation, which outweighs the increase in property tax.
In conclusion, the revised property tax rates introduced in Budget 2024 will mainly benefit owner-occupied properties with lower annual values. This measure provides some relief to homeowners in Singapore, but it does not reduce the appeal of investing in residential properties for potential long-term gains.