Five suggestions for property tax tweaks in Budget 2024

Leslie Yee

Jan 15, 2024

RESIDENTIAL property landlords are facing much higher property tax this year.

The non-owner-occupier residential tax rate rose from between 10 and 20 per cent of annual value (AV) in 2022 and between 11 and 27 per cent of AV in 2023, to between 12 and 36 per cent of AV in 2024. Higher rates apply to pricier homes.

The AV of buildings is the estimated gross annual rent of the property if it were to be rented out, excluding furniture, furnishings and maintenance fees. The AV of a property is determined based on estimated market rentals of similar or comparable properties. Many private homeowners have noted a rise in AV of between 15 and 25 per cent from a year ago.

The landlord of a home for which the AV rose from S$60,000 in 2023 to S$72,000 in 2024 has seen his annual property tax jump to S$15,120 this year, up 71 per cent from S$8,850 a year ago.

And many landlords who need to reprice their housing loans will be hit with higher interest rates. The three-month compounded Singapore Overnight Rate Average in early 2024 is up about 350 basis points from what it was at the start of 2022.

Also, securing a residential tenant could be harder this year amid the rise in the private housing stock. Around 39,700 private homes will be completed between 2023 and 2025, or about double the 20,000 units completed from 2020 to 2022, according to the Urban Redevelopment Authority.

Still, private residential landlords hoping for relief when Deputy Prime Minister and Minister for Finance Lawrence Wong delivers the Singapore’s Budget 2024 statement in Parliament on Feb 16 could be disappointed.

The government sees property tax as a key source of taxing wealth. Property tax is effective as it is hard to avoid. Taxing wealth is vital in fighting inequality, and fair, because those with greater means contribute more.

However, while housing landlords accustom themselves to property taxes staying elevated or even rising further, some property tax tweaks can be considered in the name of fairness.

Vacant homes

First, Singapore citizens should perhaps pay lower taxes when their homes are vacant.

Lower non-owner-occupier residential tax rates could apply to homes that are vacant because asset upgrading works are underway. Also, concession can be given to owners who fail to secure a tenant despite actively marketing a home for lease, due to poor market sentiment or property-specific issues.

Furthermore, take an owner of two homes who lives in one unit while carrying out upgrading work on the other, and intends to move into the home that is undergoing upgrading. It may be fair for the said owner to pay owner-occupier residential tax rates on both homes.

Indeed, the taxman benefits eventually through collecting higher taxes, as a home which has been upgraded could attract a higher AV.

Second, consider granting concessionary non-owner-occupier residential tax rates to elderly Singapore citizens.

Some elderly retirees may largely rely on rental income from an investment home to age with grace and combat the rising cost of living.

Moreover, some seniors may lease out their homes and move in with their children. Applying lower tax rates to homes that are leased out to enable multiple generations to live together can encourage multi-generational living under one roof. Such a living arrangement may help prevent social isolation among seniors and improve their mental as well as physical wellness.

Third, differentiate between residential landlords of multiple rental homes and those who own one rental home.

A key part of the retirement plan of a local couple who aim to be financially independent amid rising life expectancy and inflation may involve owning two homes – one for occupation, and the other to collect rental income.

Aspirations of Singaporeans to own investment homes should be supported to some extent, since investing in a home here is something locals are familiar with and comes with no foreign exchange risk.

Sure, non-owner-occupier residential tax rates are progressive. However, it may be fair to apply lower rates for citizens who own one investment home, and surcharges for owners of multiple investment homes.

Differentiating property tax rates based on the number of homes that a person owns is consistent with applying a higher Additional Buyer’s Stamp Duty (ABSD) rate to a Singapore citizen who buys a third or subsequent home, compared to one who buys a second home.

Non-residential rates

Fourth, narrow the gap between property tax rates of homes and other property types. Currently, transaction tax rates are generally lower for non-residential property than for residential property.

Further, the property tax rate on non-residential property is 10 per cent of AV. An investor in a commercial shophouse or a strata office/retail unit with AV of S$60,000 pays a property tax of S$6,000, but the owner of an investment home with the same AV pays S$10,800 – 80 per cent more.



Fifth, beyond tweaking property tax, consider allowing remission from ABSD for Singapore citizens who are single. This can apply to a single person who owns one home and buys a second one – provided he or she subsequently disposes of the first home. Such a change will help ease a single owner-occupier homeowner in moving homes.

Currently, a married couple, which includes a Singapore citizen, may be able to enjoy full ABSD resmission when purchasing a residential property jointly.

Subject to meeting various conditions, a couple who own a home can enjoy ABSD remission when they jointly buy another home. Among the conditions, they need to sell their first home within six months of the date of purchase of the second property for completed properties, or the issue date of the Temporary Occupation Permit / Certificate of Statutory Completion (whichever is earlier) in the case of a property that was uncompleted at the time of purchase.

As Singapore’s population ages, the need to raise taxes is real and urgent. For the financially better off, including housing landlords, annoyance at having to pay higher taxes may be mixed with pride from contributing to helping the financially less able.

Nonetheless, avoid over-taxing local housing landlords. Investing in homes here helps people become financially self-sufficient in their later years and generates both one-off transaction-related and recurring taxes.

After all, locals working hard to pursue material dreams such as owning multiple homes in safe-haven Singapore helps drive economic dynamism.

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