A more nuanced, fairer property tax
February 26, 2010
SINGAPORE: From next year, if the flat or private property you live in and own has an annual value of S$65,000, you will pay up to S$240 less in property taxes.
The new progressive property tax system, announced on Monday to the surprise of many, will see owner-occupiers exempted from tax on the first S$6,000 of the annual value - that is, the estimated rent - of their homes.
The trade-off? The S$25-to-S$150 in GST rebates, which owners of properties with lower annual values have been enjoying since 1994, will be scrapped.
The more nuanced tax system for owner-occupied residential properties will benefit all Singaporeans except the ultra-rich - those living in properties with over S$77,000 annual value. They comprise only 0.4 per cent of all owner-occupied homes in Singapore, and only 3 per cent of private owner-occupied homes here, said Finance Minister Tharman Shanmugaratnam, who also noted that the change would cost the Government S$230 million initially.
Currently, all owner-occupied residences are taxed a flat rate of 4 per cent, while investment residential properties are taxed at 10 per cent.
This “does tax the wealthy more than others”, said Mr Shanmugaratnam, but there was “scope” for a more progressive system.
One reason for the rethink: HDB homes have been appreciating in value over the years, meaning a growing tax bill for flat-owners, and while rebates over the years - the latest being in January - have helped mitigate this increase, “we need a longer-term solution that provides a fair and balanced system for all property owners”, said the Finance Minister.
Homes with an annual value of about S$80,000, therefore, will see a tax increase of “slightly less than S$100″ a year.
“However, our property tax rates, even for the high-end, will remain lower than in most international cities,” Mr Shanmugaratnam stressed.
“That is as it should be, so that we remain a vibrant and attractive place for businesses and individuals alike.”
Binjai Park resident Mr Philip Goh, 61, said that as a retiree, “anything helps”. His semi-detached house’s annual value is about S$31,000, and he forked out S$1,250 in property tax last year.
The change in tax structure will have minimal impact on the property market, analysts believe, given the tiny minority that will be negatively affected.
Those likely to be taxed “slightly more” were the luxury properties priced above S$4 million in prime districts, said real estate lecturer Nicholas Mak of Ngee Ann Polytechnic. And as taxes for non-owner-occupied residential properties remain at 10 per cent, he added, there should be no impact on those who buy for investment.
Nonetheless, as annual values continue to go up, “the question is whether the Government will increase the upper limit of the annual value bracket where the property tax is 4 per cent”, said Mr Mak.
Does this signal that the Government might go further down the path of taxing the rich more, something it has argued against overdoing? NUS Business School Associate Professor Ho Yew Kee: “What the Government probably thinks is that the extremely asset-rich … have to carry a little bit of burden, and contribute a bit more. 0, 4, 6 per cent is trivial - if I have an S$8-million house, I’d pay S$2,000 more in property tax a year. It’s not a lot.”
Source: Channelnewsasia.com
Real estate developers to bring forward property launches
February 26, 2010
SINGAPORE : Singaporeans can look forward to more property launches. The Real Estate Developers’ Association of Singapore (REDAS) on Thursday announced that its members will be bringing forward property launches.
REDAS added that its efforts are only limited by the land available and hence the long-term solution to a stable market is still adequate supply.
The association celebrated the Lunar New Year, riding on an upbeat mood.
Joining in its Spring Festival was Finance Minister Tharman Shanmugaratnam, and the association shared with him its views on his recent Budget Statement.
Simon Cheong, president, Real Estate Developers’ Association of Singapore, said: “REDAS was hoping for more cash in our ang pows (red packets) from you, Minister. But when we opened the ang pow, we were disappointed there was not much inside for developers.
“Nonetheless, we are happy with your long-term productivity ang pow, as what is good for Singapore’s economy in the long run must also be good for the Singapore property market. It is what REDAS calls a deferred payment ang pow.”
REDAS said that its members are surprised with the speed with which Singapore’s property market has recovered. But they added that they are prepared to live with the current problems rather than the problems faced by the property market last year.
However, in the interest of a stable property market, REDAS said its members are committed to a fast-track supply to satisfy demand. This would also minimise excessive speculation in the property market.
Mr Cheong said: “Given the unexpected return of an active property market, developers over the next few months would also be actively bidding for more land to position for the future supply.
“As such, REDAS, unlike the situation in the preceding 12 months, is now looking forward to more sites in the confirmed list for developers to replenish their land bank.”
Just last week, the government introduced two more measures to cool the property market and pre-empt a bubble from forming in the private homes sector.
Source: channelnewsasia.com - Real estate developers to bring forward property launches