Wednesday, February 24, 2010

Property Tax revised

Finance Minister Tharman Shanmugaratnam announced in his lengthy Budget 2010 speech yesterday that there will now be a tiered taxation structure as opposed to the old flat rate set way back in 1994.

We've done some calculations. It's true! 'Poor' folk like us will have to pay less tax!




The tax rate for owner-occupiers (that is people who own the home they live in) will be adjusted from the current 4% flat rate to:
  • 0% for the first $6,000 of Annual Value
  • 4% for the next $59,000 of Annual Value
  • 6% cent for the balance of Annual Value in excess of $65,000

Annual Value is the estimated annual rent your property will get if it is rented out. So if your home can be rented out for $1,500 a month, the annual value will be $1,500 x 12 = %18,000.

Non-owner-occupied residential properties and other properties are taxed at 10%.

So under the current system of 4%, your property tax will be $720. Under the new system, your tax will be $480, giving you a savings of $240 a year.

Incidentally, IRAS just raised the Annual Values of HDB flats last November, but gave a 50% rebate capped at $120. This new tax structure means HDB owners will pay less than before.

Under existing 4% structure for an average 4RM with AV of $9,000:
Tax on AV: $360
Less GST Rebate: $50
Sub-total: $310
Less HDB Rebate (50% or $120): $120
_____________________
Total Tax Payable: $190

Under the new structure:
Tax on AV: $120
Less GST Rebate: $50
Sub-total: $70
Less HDB Rebate (50% or $120): $35
____________________
Total Tax Payable: $35

Via Singapore Budget. Required reading: Annual Values explained and IRAS E-Tax Guide for 1 Jan 2010.

As posted in h88.com.sg by John

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