The government announced today that the residential property tax rate and the Annual Value of the residential properties will be adjusted upwards from 1 January 2024.
However, the government is also giving property tax rebate for all owner-occupied residential properties in 2024. As a result, the property tax on most HDB flats will not be affected.
Who will be affected?
This is an increase in the wealth tax which will affect owners of luxury properties more than owners of mass-market homes.
Most owners of private residential properties in the mass-market and mid-tier segment may pay a small increase in their annual property tax bills in the tens of dollars or a few hundred dollars next year.
The larger hike in property tax rates and Annual Values (AV) will affect owners of non-owner-occupied homes because they will not enjoy the tax rebate, as well as the larger units in luxury condominium and landed homes (such as Good Class Bungalows) where the AV exceed $70,000.
The property tax rate is progressive. The higher the AV, the higher the property tax rate.
The increase in property tax is unlikely to adversely affect the demand for investment rental properties because the incremental rise in property tax is not as significant as the mortgage interest and instalment payments. Although residential property rentals are expected to gradually decline next year, interest rates are also expected to ease in 2024. The lower interest rates will bring some relief to property investors.
Luxury property owners
Owners of luxury residential properties will take the hike in property tax in their stride as the incremental property tax payable from next year onwards is only a small fraction of the property value.
Among the wealthy who can afford luxury homes, living in such properties is a lifestyle choice. Furthermore, they may treat such real estate as trophy homes. An increase of a few thousand dollars in property tax will not deter them from buying and owning such luxury properties. Examples of luxury condominiums are Ardmore Park, Four Seasons Park and St Regis Residences Singapore.