- Joined
- Jul 24, 2008
- Messages
- 33,627
- Points
- 0
Jul 13, 2010
Property tax not based on market rental forecasts
<!-- by line --><!-- end by line -->
<!-- end left side bar --><!-- story content : start -->
MR PAUL Chan ('Surprised by sharp tax hike on owner-occupied homes'; July 3) was under the impression that the Inland Revenue Authority of Singapore (Iras) estimates the annual value of properties in advance of market trends. He also felt that increases in the annual value of a property based on market rentals were not right for owner-occupiers.
His view reflects a frequent misconception about property tax. It is in fact a tax on property ownership, and is levied irrespective of whether the property is tenanted.
=> When it cums to taxation, Phole dwellers becum 'owners'. When it cums to rights, they becum 'lessees'.
This is unlike income tax, which is imposed on only properties that are rented out.
The property tax is pegged to the annual value of the property, which is determined based on market rentals of similar properties prevailing at the time of assessment. It does not take into account any forecast or estimate of future movements in market rentals.
Iras' practice is consistent with that in places such as Britain, the United States, Hong Kong and Australia, which also levy property tax based on prevailing market values rather than on the actual receipts derived from renting out a property.
=> But people are real 'owners', dude!
Iras reviews annual values each year. It will increase or decrease annual values based on prevailing market rentals. The reliance on market rentals leads to less volatility in estimates of annual value and hence, the property tax payable, compared to relying on the market price of properties bought and sold, which tends to go through more pronounced cycles.
The annual value of Mr Chan's property was in fact reduced in past market declines, the most recent one being last year.
The Government introduced in Budget 2010 a progressive property tax schedule for owner-occupied residential properties from next year. Under the new progressive schedule, all HDB flat owners and the vast majority of residential property owners will enjoy an effective property tax rate lower than 4 per cent of annual value.
Deanna Choo (Ms)
Director (Corporate Communications)
Inland Revenue Authority of Singapore
Property tax not based on market rental forecasts
<!-- by line --><!-- end by line -->
<!-- end left side bar --><!-- story content : start -->
MR PAUL Chan ('Surprised by sharp tax hike on owner-occupied homes'; July 3) was under the impression that the Inland Revenue Authority of Singapore (Iras) estimates the annual value of properties in advance of market trends. He also felt that increases in the annual value of a property based on market rentals were not right for owner-occupiers.
His view reflects a frequent misconception about property tax. It is in fact a tax on property ownership, and is levied irrespective of whether the property is tenanted.
=> When it cums to taxation, Phole dwellers becum 'owners'. When it cums to rights, they becum 'lessees'.
This is unlike income tax, which is imposed on only properties that are rented out.
The property tax is pegged to the annual value of the property, which is determined based on market rentals of similar properties prevailing at the time of assessment. It does not take into account any forecast or estimate of future movements in market rentals.
Iras' practice is consistent with that in places such as Britain, the United States, Hong Kong and Australia, which also levy property tax based on prevailing market values rather than on the actual receipts derived from renting out a property.
=> But people are real 'owners', dude!
Iras reviews annual values each year. It will increase or decrease annual values based on prevailing market rentals. The reliance on market rentals leads to less volatility in estimates of annual value and hence, the property tax payable, compared to relying on the market price of properties bought and sold, which tends to go through more pronounced cycles.
The annual value of Mr Chan's property was in fact reduced in past market declines, the most recent one being last year.
The Government introduced in Budget 2010 a progressive property tax schedule for owner-occupied residential properties from next year. Under the new progressive schedule, all HDB flat owners and the vast majority of residential property owners will enjoy an effective property tax rate lower than 4 per cent of annual value.
Deanna Choo (Ms)
Director (Corporate Communications)
Inland Revenue Authority of Singapore
