Property tax reduced due to real estate slump

Source : Straits Times - 9 Apr 2009

OWNERS could pay up to 60 per cent less property tax after the taxman reduced the value of tens of thousands of sites following the real estate sector’s slump.

The Inland Revenue Authority of Singapore (Iras) recently held its annual review - brought forward in the light of dire market conditions - which found that 99 per cent of assessed properties had their values reduced.

Together with the 40 per cent property tax rebate announced in January’s Budget, owners of these properties will now pay 45 per cent to 60 per cent less property tax.

The values of properties are reviewed by Iras annually to ensure that they reflect prevailing rental market rates for property tax assessment.

Falling property prices and rents had prompted calls for Iras to also reduce property tax in line with market conditions.

The tax authorities reviewed a total of 116,200 properties in the first quarter.

Of the 84,900 private residential sites assessed, 99 per cent had values reduced by between 5 per cent and 20 per cent.

The total reduction in property tax payable for these homes is about 45 per cent to 50 per cent.

Of the 15,600 offices reviewed, 92 per cent had their annual values lowered by between 10 per cent and 35 per cent. This translates to a total reduction of tax liability by 45 per cent to 60 per cent.

And 98 per cent of the 9,700 industrial properties reviewed suffered a loss in value of 5 per cent to 30 per cent, translating to a total reduction of tax liability by 45 per cent to 60 per cent.

Based on current rentals, the annual values of HDB flats ’should be higher than the existing 2009′ ones, but Iras is keeping them unchanged ‘in view of the poor economic conditions and uncertainties in the HDB rental trends in the coming months’.

The taxman said that it would review the values of all private properties, including retail ones, by the third quarter.