Expected Additional Property Tax Collections Following November 2023 Announcement of Increase

Thank you, Sir. Mr Speaker, property tax is a tax on property ownership, and it is our principal means of taxing wealth. Property tax 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, property tax 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 property tax rebate of up to 100%, capped at $1,000.

With the rebate, owner-occupiers of Housing and Development Board (HDB) 1- and 2-room flats continue to pay no property tax; for owner-occupiers of other HDB flat types, the average property tax increase is less than $3 per month; and for half of private property owner-occupiers, their increase in property tax was less than $15 per month.

On Mr Pritam Singh's query on property tax collections, after accounting for the 2024 property tax rebate, the 2024 residential property tax 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 property tax rebates, we are prepared to consider if such rebates are needed when we review AVs and property tax payable.

Thank you to the Minister for the reply on this Parliamentary Question. On the expected property tax 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 Speaker, to Mr Singh's first question. Indeed, the 2024 residential property tax revenue is higher than what we had originally anticipated when we debated this issue in Budget 2022. The higher-than-expected property tax 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. With these rebates, as I have shared earlier in my main reply, 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 or who may need a bit more time, to pay for their property taxes by instalments. 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 have only one property, that is owner-occupied. The rates are lower compared to non-owner-occupied properties and we provide them with this property tax rebate.

Thank you, Mr Speaker. Sir, I am aware that we had agreed previously on the need to increase taxes on properties. But within my constituency, several of my residents, in fact, 50% of my residents are in private estates and a number of them are retirees. They have no source of income, absolutely no source of income. Some of them have told me that their increase has gone up by almost 30%. So, the impact of the increase in property tax on them is actually quite high.

So, may I ask the Minister whether the Ministry of Finance (MOF) will consider reviewing the hefty tax increase on owner-occupied properties and, perhaps, consider a higher amount of rebate, rather than have it capped at $1,000? At the end of the day, the impact on them is absolute, in terms of absolute dollar value. It is high since they do not have any increase in, say, pension or they have got absolutely no income. So, what do they do when they face a huge property tax bill that has increased substantially?

Mr Speaker, I understand the concerns that Mr Lim is raising on behalf of his residents. I also have residents who are in a similar situation.

Certainly, I think, we empathise with the situation that the retirees are in because they moved into their houses many years ago. Now that they are growing older, they enjoy the company of their neighbours. They like staying in the neighbourhood, their nice community. And we understand that for some of them, this increase in the property tax is increasing the amount they need to pay.

To the point about whether we can provide more help through property tax rebates, this is something which, in my main reply, I said, Ms Joan Pereira had also asked, we are prepared to consider and to take a look and see what we can do to help, not just seniors but also other families who are facing a large increase in their property tax bills.

Sir, if I may also share some data with Mr Lim and the House. While it is true that some households may face a higher increase, depending on the AV of the property, because the larger the property, the higher the AV, the larger the magnitude of the increase would be. But, if we look at private properties across the board and, after the rebate – the 15% rebate capped at $1,000 – half of private property owner-occupiers will see their property tax payable increase by less than $15 per month.

So, yes, it is an increase, but with the property tax rebate, the increase has been cushioned for a large number of private property owners. There will be some, because of the AV of the properties that they stay in, being on the higher side. They will face larger increases.

Thank you, Mr Speaker. I am heartened that the Minister has shared that IRAS is prepared to take into consideration the various circumstances of the owners in the assessment of property tax, such as giving help. I have a short supplementary question. Are there avenues for property owners to challenge the AV assessments, if they do not quite agree with how the AV is assessed, which is based on various factors, such as rental rates, physical attributes and so forth?

Mr Speaker, taxpayers can file an objection to IRAS if they disagree with the assessment. They can provide the grounds of objection, including evidence to support the different AV. And, if they are not satisfied with the outcome of the objection, they can appeal to the Valuation Review Board within 30 days of IRAS' decision. The Valuation Review Board is an independent tribunal, chaired by a district judge from the State Courts.

Sir, I also want to clarify one point that, I think, is sort of embedded in what Mr Yip asked, which is how IRAS assess the AVs. In my main reply, I mentioned a few factors that they look at – the location, the age and the condition of the property. But there is also one point that I would like to share with the House, which is that when IRAS reviews the AVs of the residential properties every year, they will look at, generally, what is in the market, and they will exclude outliers. If you have one particular property in the neighbourhood, which is an outlier – the rental is particularly high – IRAS would disregard that and it will look at the general market trends in coming up with the assessment for the AVs.

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 the 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 Speaker, I understand where Mr Dennis 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 a private property, you will still get a rebate, but it is 15% and is 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 and 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.