6 Mr Pritam Singh asked the Deputy Prime Minister and Minister for Finance (a) how much additional property taxes does the Government expect to collect in 2024 following the decision to increase property taxes as announced by the Ministry on 30 November 2023; and (b) how much property tax does the Government expect to collect in 2025 after accounting for the one-off rebate in 2024.
Mr Chee Hong Tat: Thank you, Sir. Mr Speaker, property Tax (PT) is a tax on property ownership, and it is our principal means of taxing wealth. PT payable is based on the Annual Value (AV) of the property, which is the estimated annual rent of the property. We have seen from past data that AV rises and falls based on market trends.
Mr Lim Biow Chuan and Mr Yip Hon Weng asked how property AVs are assessed. The Inland Revenue Authority of Singapore (IRAS) takes reference from rental transactions for similar properties over the course of the year. IRAS also takes into account the property’s attributes such as its location, age, land and floor area, improvement works last done and whether there are specific features like swimming pools.
For 2024, most owner-occupied residential properties saw their AV increase by more than 20% due to the increase in market rentals from 2022 to 2023. In addition, as announced in Budget 2022 as a form of wealth tax, PT rates were increased in two steps in 2023 and 2024, for high-value owner-occupied private properties with AVs above $30,000, as well as all non-owner-occupied properties. These moves were intended to enhance the progressivity of our wealth taxes, which I recall Members from both sides of the House had supported during the 2022 Budget debate.
Mr Lim also asked if the property taxes on owner-occupied properties can be mitigated. The Government has indeed done so. One, property tax rates on owner-occupied properties are lower than non-owner-occupied properties. Two, to cushion the impact of the increase on owner-occupiers, the Government has provided a PT rebate of up to 100%, capped at $1,000.
With the rebate, owner-occupiers of HDB 1- and 2-room flats continue to pay no PT; for owner-occupiers of other HDB flat types, the average PT increase is less than $3 per month; and for half of private property owner-occupiers, their increase in PT was less than $15 per month.
On Mr Pritam Singh’s query on PT collections, after accounting for the 2024 PT rebate, the 2024 residential PT revenue is expected to be around $600 million higher than the 2023 PT collections. Around two-thirds of the increase is contributed by non-owner-occupied properties.
Sir, the Government closely monitors the rental market and reviews the AVs every year. On Ms Joan Pereira’s question about future PT rebates, we are prepared to consider if such rebates are needed when we review AVs and PT payable.
Mr Speaker: Mr Pritam Singh.
Mr Pritam Singh (Aljunied): Thank you to the Minister for the reply on this Parliamentary Question. On the expected PT collection, in Budget 2022, the Finance Minister announced that the two-step increase in the property tax would raise the property tax revenue by $380 million per year. I believe the Minister said that the collection expected is $600 million. Can he, please, clarify the difference?
The second question I have pertains to some feedback that has been received, since people received the absolute dollar amount increase they are expected to pay this year. One, which is quite common, has been a request, other than the rebate, to consider whether a differential rate for property tax can be considered, specifically, for those with multiple properties as opposed to those with a single property? This feedback tends to come from those who are retired and senior. So, it is a query to the Minister, whether the Government would consider such a differentiated regime, other than the solution which it has, to moderate or mitigate the rise in property tax, which is the one of rebate?
Mr Chee Hong Tat: Mr Speaker, to Mr Singh’s first question. Indeed, the 2024 residential PT revenue is higher than what we had originally anticipated when we debated this issue in Budget 2022. The higher than expected PT collection was largely due to higher AVs, that arose as a result of the higher market rentals for residential properties. And to cushion this impact, what we have done, is to provide rebates for owner-occupied properties. The rebate is done for both 2023 and 2024. The rebate is on a scale, depending on the property type. For this year, the rebate is up to 100%, but capped at $1,000.
So, for HDB 1- and 2-room flats, for example, it is 100%. So, they do not pay property tax. For 3-room flats, it is 70%; 4-room flats, 50%; 5-room flats, 40%. If you go all the way to the private properties, it is 15%, capped at $1,000.
So, with these rebates, I shared earlier in my main reply, that the increase in the property tax for owner-occupied properties, including for private properties, would be cushioned.
Of course, there are different ways to do this. We are open to exploring whether there are other ways to help seniors and retirees, who are staying in private properties, who may need a bit more time, to pay for their property taxes by installment. This is something that we are open to considering.
If I may just share one comment on Mr Singh’s question, about whether there is a differentiated rate. Today, there is already a differentiated rate. Because if you have multiple properties, you can only claim owner-occupation for one of them. The subsequent properties would be non-owner-occupied, and the rates would then be higher and you do not get the rebate for those subsequent non-owner-occupied properties. But for the people who are staying on their own and only one property, that is owner-occupied. The rates are lower compared to non-owner-occupied and we provide them with this property tax rebate.
Mr Speaker: Last supplementary question, Mr Dennis Tan.
Mr Dennis Tan Lip Fong (Hougang): Thank you, Mr Speaker. Just to weigh in on the discussion on the AV applicable to properties where the owners are retirees and there are no income-earning occupiers in these properties. Instead of ad hoc assistance, I do not know what Minister was alluding to, when he said that IRAS may look into providing assistance. Instead of ad hoc assistance, can IRAS consider having a separate category of owner-occupied property tax rate for properties where they are solely occupied by owners who are retirees?
Mr Chee Hong Tat: Mr Speaker, I understand where Mr Tan is coming from, but, I hope he would also appreciate that, from the implementation point of view, it would be very, very challenging and very difficult for IRAS to be able to differentiate the different types of properties, depending on who are the occupiers. There are retirees who stay with their families. They own the property, their children and family stay with them. There are those who stay on their own, but their children stay nearby or they stay somewhere else and they come and visit their parents. So, every family would have a different situation.
Instead of doing that, what we have done is not to provide differentiated rates based on the very varied circumstances that different households would face, but, we will provide help through the rebates, which I think is a fair and progressive way. Because, as I mentioned earlier, if you stay in a smaller property, especially HDB flats, you get a higher percentage of the rebate. If you stay in private property, you will still get a rebate, but it is 15%, capped at $1,000. It has helped to reduce the property tax payable for many of the households.
But, of course, if you stay in a very big house, your AV is very high, then this impact of the property tax rebate may not be as significant. Because your increase is much higher and it is capped at $1,000. For the large majority of private property owners, who stay in the properties like terraces and, especially, some of the estates that I think Mr Tan would be familiar with; for this category, for many of them, the property tax rebate has helped to cushion the increase in the property tax payable.
Ministry of Finance
6 February 2024
https://sprs.parl.gov.sg/search/#/sprs3topic?reportid=oral-answer-3413
Office of the Leader of the Opposition 