SINGAPORE - The taxman has handed an early Christmas gift to eight in 10 private property owners, who will pay less tax in 2016 as annual values of close to 260,000 homes are marked down.
Last year, only a quarter of private property owners got a tax cut despite a broad fall in market rentals. This year's review means 93 per cent of all residential property owners will enjoy a tax cut next year.
More than 80 per cent of the population live in Housing Board flats, and all flat owners will pay lower or no property tax next year, the Inland Revenue Authority of Singapore (Iras) said yesterday.
Annual values have been reduced for 380,000 four-room flats, 250,000 five-room flats and 65,000 executive flats, Iras said.
Iras reviews property values annually based on the annual value of rents paid for similar homes nearby. This round, 28,200 three-room HDB flat owner-occupiers with revised annual values that fall under the $8,000 threshold will pay no tax.
Under a more progressive tax regime that kicked in last year, flat owners who live in their homes pay no tax on the first $8,000 of the annual values of their homes.
Owner-occupiers of one- and two-room flats continue to be exempt from property taxes.
All other HDB flat owners will reap tax savings of 9 to 24 per cent less than what they paid this year. For owner-occupiers, this comes up to tax savings of $1.60 to $16.80.
Among private home owners getting a tax cut this round, more than 80 per cent will see tax savings of between 3 per cent and 20 per cent.
Letters have been sent to home owners on next year's levies.
One Telok Kurau resident was pleased the annual value of his penthouse unit had fallen by 10 per cent, from $54,000 to $48,600.
He told The Straits Times: "I'm happy, I think everybody is happy. In Singapore, there are not many things that get cheaper."
R'ST Research director Ong Kah Seng said it is "quite unusual" to see drastic reductions in the annual values of some private homes, though Iras acted "within expectations" by responding to leasing headwinds.
Private residential rents dipped 3.3 per cent in the first nine months of this year, after falling 3 per cent last year and prices will only worsen as more properties are completed in 2016, Mr Ong said.
KPMG Singapore principal tax consultant Leung Yew Kwong said of Iras' decision: "The evidence is staring them in the face, it's something they cannot ignore. They're reacting to people writing in because of the persistent perception that market rents are dropping. In terms of their actual tax collection, it is really not a big dent to the whole."
In the 12 months to March 31, Iras collected $4 billion in property taxes. Of that, private residences contributed $838 million, and $140 million came from HDB flats. The rest was non-residential property tax.