Introduction

Property tax is imposed under the Property Tax Act on immovable properties and is payable in advance each year. The tax payable in respect of a property is computed by applying the applicable tax rate to the annual value of the property.

Annual value is the estimated annual rent a property can fetch if it were rented out. In determining the Annual Value of a property, IRAS will consider the rentals of similar properties in the vicinity, size and condition of the property, and other relevant factors. The annual value is determined in the same manner regardless of whether the property is let-out, owner-occupied or vacant.

The annual value of the land is determined at 5% of the market price of the land. When a building is demolished, the land would have to be assessed by this method.

The prevailing property tax rate for industrial, commercial and let-out residential properties is 10%. The Government announced the move to a new progressive property tax regime for owner-occupied residential properties in Budget 2010 which will take effect from 1 January 2011. Under this regime, the first $6,000 of AV of the property will be exempted from property tax. The next tier will be taxed at 4%, and the balance of AVs in excess of $65,000 will be taxed at 6%. This is a significant change in the property tax regime, which will provide tax savings to owner-occupiers of HDB flats and most private residential properties.

Property Tax Exemption

Section 6(6) of the Property Tax Act provides that all buildings or parts of buildings used exclusively for the following purposes shall be exempted from property tax:

a)  as places for public religious worship

b)  for public schools which are in receipt of grants-in-aid from the Government

c)  for charitable purposes

d)  for purposes conducive to social development in Singapore.

In addition, property tax exemption may be granted for the land during the construction and development phase of the above buildings (which can qualify for property tax exemption when completed).

To apply for the above-mentioned property tax exemption for qualifying lands or buildings, you need to write to the Inland Revenue Authority of Singapore (IRAS) with supporting information for approval. For further information, you may contact IRAS at 1800 356 8300.