Comment: Will rising property taxes dampen the aspirations of Singapore’s rental market?

Instead, the increase in property tax rates will have a bigger impact on non-owner occupied homes – something many current and potential owners in Singapore will surely consider.

The tax hike will certainly be felt most at the higher end of the spectrum, as it is designed to target indirect proxies for wealth.

As an example, an investment property of S$18 million in District 10 with a PV of S$360,000 will incur property tax of S$89,850 in 2023 and S$118,800 in 2024, against 66,000 current Singapore dollars.

That said, a significant proportion of those who own private residential properties for rent will see a moderate increase in their property tax.

Many of these properties are in the lower tax brackets with PVs between S$30,000 and S$42,000, taken from Urban Redevelopment Authority (URA) data on example rental contracts, and are often properties deprived of 1 and 2 smaller parts in OCR.

But the fact is that all property owners looking for rental income will see higher taxes: properties with a PV of S$30,000, the first tax bracket, will pay S$3,300 in 2023 and S$3,600 in 2024, compared to the current S$3,000.

Properties with a PV of S$60,000 will pay S$8,850 in 2023 and S$10,800 in 2024, up from the current S$6,900.

IS REAL ESTATE INVESTMENT STILL AN ATTRACTIVE WAY TO CREATE A HERITAGE?

The once bulletproof strategy of owning multiple properties for long-term wealth accumulation may face headwinds.

Rental profits will inevitably fall with the new tax changes, which will closely follow the cooling measures in December 2021, such as the increase in the additional buyer’s stamp duty (ABSD).

Even if the income doesn’t completely evaporate, potential owners might think twice before entering the rental market.

About Gene Schafer

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