SINGAPORE - Property taxes for most home owners will go up in 2024 because of higher market rents and annual values for most residential properties, as well as an increase in property tax rates for higher-value private homes.

But the Government will provide a one-off rebate of up to 100 per cent for all owner-occupied homes to help cushion the impact of the tax increase amid cost-of-living concerns, the Ministry of Finance (MOF) and Inland Revenue Authority of Singapore (Iras) said in a statement on Nov 30.

The annual value of Housing Board flats and most private residential properties will be raised from Jan 1, as part of Iras’ yearly review of properties to calculate how much taxes should be paid, the authorities said.

A property’s annual value is its estimated yearly rent if it were to be rented out, and is determined based on market rents of comparable properties and other factors.

The annual value is assessed for the purpose of property taxes, which are Singapore’s primary means of taxing wealth and are paid yearly.

Iras monitors market rental trends to determine the annual value of properties. Since the last revision of annual values on Jan 1, 2023, market rents have increased by about 20 per cent for HDB and private residential properties, said MOF.

As announced in Budget 2022, the second and final step of property tax rate increases will also take effect from Jan 1, with steeper hikes for higher-end properties.

Those who own expensive private property will feel the brunt of the revision, particularly owners of properties bought for investment.

The property tax rate increase will affect only residential properties not occupied by their owners and owner-occupied homes with an annual value of more than $30,000. All owner-occupied HDB flats are not affected.

The authorities said property tax rates for residential properties not occupied by their owners, including investment properties, will be increased to 12 per cent to 36 per cent by 2024. This compares with the current 11 per cent to 27 per cent tax levied on such properties.

With the property tax rebates announced on Nov 30, all one- and two-room HDB owner-occupiers will continue paying no property tax in 2024.

For owner-occupiers of other flat types, the rebate will be automatically offset against any property tax payable.

On average, they will face a tax increase of less than $3 a month in 2024, with the increases ranging from $1.50 for a three-room flat to $6.30 for an executive flat monthly after rebates.

The rebates, said MOF and Iras, are tiered to ensure that those with greater means pay their fair share of taxes and that Singapore’s property tax regime remains progressive.

For example, owner-occupiers of one- and two-room flats will get a 100 per cent rebate, while those with four-room units will get a 50 per cent rebate. Executive flat owner-occupiers will receive a 30 per cent rebate, while those with private properties will get a 15 per cent rebate, capped at $1,000.

For private property owner-occupiers, the increase in property taxes will be steeper for higher-end homes, while the bottom half of this group will see a property tax increase of less than $15 a month in 2024.

Dr Lee Nai Jia, head of real estate intelligence, data and software solutions at the PropertyGuru portal, said that “without the one-off rebate, HDB flat owners and owner-occupiers of (lower-value) private homes will likely see a steep increase in property tax”.

Mr Lee Sze Teck, senior director of data analytics at property firm Huttons, said a moderation in rents in 2024 could make it harder for landlords to pass the increase in property taxes to tenants.

Mr Song Seng Wun, Singapore economic adviser at financial service company CGS-CIMB, said the upcoming property tax increase is not a huge surprise, based on property trends in the past 12 months.

“The only question was what the quantum of increase is and what rebates are available. For the coming 12 months, however, with labour market conditions stabilising and more rental housing supply available, the rental market has stabilised. Assuming there are no external shocks to the economy, the annual property tax for 2025 may also stabilise,” he said.

Higher annual value thresholds for social support schemes

From 2024, the Government will also raise the annual value thresholds that are used to determine eligibility for social support schemes.

This is to ensure continued help for Singaporeans with greater needs amid the rise in annual property values.

These schemes include the GST Voucher scheme and MediShield Life premium subsidies.

From Jan 1, 2024, the authorities will crank up the annual value threshold from $13,000 to $21,000 for the first tier, which provides a higher quantum of benefits. The revised threshold will cover all HDB flats, said MOF.

The second tier, which results in a lower quantum of benefits, will see a higher annual value threshold too.

The revised annual value threshold of $25,000, up from $21,000, will span about 75 per cent of residential properties, including some lower-value private homes.

MOF said a total of more than one million residential properties remain covered under the revised thresholds.

For example, an eligible owner-occupier of a five-room HDB flat with an annual value of $11,000 in 2022 would have received $700 in GST cash vouchers in 2023.

If the annual value of this person’s property rose to $14,000 in 2023, and assuming other eligibility criteria are met, he or she will receive $850 in GST cash vouchers in 2024.

Had the annual value thresholds not been revised, this individual would have received the lower-tier quantum of $450, MOF said.

A property’s annual value in the preceding year determines an individual or a household’s eligibility for social support schemes in a given year. 

Mr Song from CGS-CIMB said the Government is being inclusive in ensuring that not just one segment of society – those who live in smaller flats and are low-income earners – would benefit from these schemes.

“While the middle- to higher-income families pay more GST (goods and services tax) and income taxes, there is still something given back to them,” he said.