Every year we pay taxes to the government, which is mandatory. Whether it comes from our work, income from our land or anything we possess that can be taxable, we are required to pay tax. It may vary depending on what is the source of your income and how much is your income for that year. On the other hand, land tax is imposed under the Property Tax Act and it is payable in advance each year. The tax is computed by applying the appropriate tax rate to the annual value of the property. The annual value is the estimated annual rent of the property in case the property is rented-out.
The normal property tax rate for commercial, industrial and let-out residential properties is 10%. These include HDB flats, offices, factories, houses, shops and land. Singaporean government announced the move to a new progressive property tax for owner-occupied residential properties. You will be eligible for concessionary owner-occupier tax rate if your property tax rate is low and if you occupy your house personally. The owner-occupier tax rate based on the annual value of your property is as follows:
- Annual value for first $6,000 – its progressive tax rate is 0%.
- Next $59,000 – its progressive tax rate is 4%.
- Amount exceeding to $65,000 – its progressive tax rate is 6%.
Non-residential buildings or property will continue to be taxed at 10%. There is exclusion of residential tax depending on how the property is intended for. According to Section 6 of Property Tax Act, that all buildings or part of buildings used exclusively for the following purposes shall be exempted from property tax:
- For place of public religious worship.
- For public schools.
- For charitable purposes.
- For purposes conducive for social development in Singapore.
Property tax exemption may be approved for the land under construction and development stage of the above buildings.