Starting next year, owners of flats or private properties with an annual value of $65,000 will have to pay up to $240 less in property taxes.
The recently announced progressive property tax system will exempt owner-occupiers from tax on the first $6,000 of the annual value of their homes.
The $25 to $150 GST rebates, which owners of properties with lesser annual value have been enjoying since 1994, will be scrapped.
All Singaporeans, excluding those residing in properties with an annual value of more than $77,000, will benefit from this more nuanced tax system imposed for owner-occupied residential properties. According to Finance Minister Tharman Shanmugaratnam, ultra-rich Singaporeans comprise only three percent of private owner-occupied homes and only 0.4 percent of all owner-occupied homes in Singapore. He also noted that the change would initially cost the government $230 million.
Currently, a flat rate of 4 percent is being taxed on all owner-occupied residences, while a 10 percent tax rate is imposed on investment residential properties.
Although there was a “scope” for a more progressive system, Mr. Shanmugaratnam said this “does tax the wealthy more than others”.
Homes with an annual value of around $80,000 will see a tax increase of “slightly less than $100" a year.
“However, our property tax rates, even for the high-end, will remain lower than in most international cities,” said Mr. Shanmugaratnam.
“That is as it should be, so that we remain a vibrant and attractive place for businesses and individuals alike.”
Mr. Philip Goh, a resident of Binjai Park, said that as a retiree, "anything helps". The annual value of his semi-detached house is about $31,000, and he forked out $1,250 in property tax last year.
Given the tiny minority that will be affected negatively, analysts believe that the change in tax structure will have minimal impact on the property market.
According to Nicholas Mak, a property lecturer from Ngee Ann Polytechnic, those likely to be taxed "slightly more" were the luxury properties priced above $4 million in prime districts. He added that as taxes for non-owner-occupied residential properties remain at 10 percent, there should be no impact on those who purchase for investment.
On the other hand, as annual values continue to soar, Mr. Mak said: “the question is whether the Government will increase the upper limit of the annual value bracket where the property tax is 4 percent.”