Government clarifies reports about Singapore property taxes

Ministry of Finance says, the annual property tax payable for the majority of home owners only range between $0 to $560.

On August 20, Singapore Business Review published a story online about Singapore property taxes being second highest among world class cities citing a report from Savills Research & Consultancy.

To clarify the points raised in the report, here's a letter from MOF Corporate Communications Director Lim Bee Khim:

I refer to your report, “Singapore property taxes second highest among world class cities“ in Singapore Business Review (20 Aug 2012). We wish to clarify that the report by Savills, entitled ‘World Cities Review’, does not reflect the low property taxes paid by the vast majority of Singapore property owners.

The Savills Research focuses on the cost a foreigner investing in the Singapore market will likely bear on buying, owning and selling a property in Singapore.

Owner-occupied homes enjoy a concessionary progressive tax rate of 0% for the first $6,000 AV, 4% for the next $59,000 and 6% for AV exceeding $65,000. Based on the report, the annual occupation tax in Singapore is about S$58,000 (£29,000) for a Savills Executive Unit (SEU) made up of one middle-aged expatriate CEO, one senior expatriate director, a locally employed director and four locally-employed administrative staff – a total of 7 people. The average annual property tax payable by each person in the SEU for one property is $8,286 (S$58,000 /7). The Annual Value (AV) of such a property works out to be about $164,000 – a very high end property with an estimated market price of S$7m. Properties with such AVs fall within the top 0.1% of all owner-occupied residential property in Singapore.

In fact, about 86% of all owner-occupied residential properties in Singapore have an AV of below $20,000. The annual property tax payable for the majority of home owners thus range between $0 to $560, which translates to 0% to 2.8% of AV. The property tax of a typical 5-room HDB flat with an AV of $11,700 is about $228 or 1.9%.

The report also factored in the cost of Additional Buyer’s Stamp Duty (ABSD) of 10% on a Foreigner’s purchase of residential property in Singapore. ABSD of 3% is chargeable on Permanent Residents and Singaporeans who already owned one and two properties respectively. ABSD was introduced to moderate investment demand for residential property and to promote a more stable and sustainable market. Most Singaporeans own only 1 or at most 2 properties and will not pay ABSD.

To deter speculation, when a property is disposed within 4 years of purchase, a Seller’s Stamp Duty (SSD) of 16%,12%,8% or 4% is imposed, depending on the holding period of the property. SSD is not payable for the majority of owners, who are long term occupiers and hold on to their properties beyond 4 years.

Hence a typical Singaporean home enjoys low property tax rates and is not affected by ABSD and SSD.