The estimated annual rent for the building, excluding furniture and furnishings, is calculated by the AV. The AV is calculated using estimated rental rates of comparable properties.

The AV will be higher in many homes in 2024 due to the general rise in rents in homes since 2022. In the third quarter of 2018, the Urban Redevelopment Authority’s (URA’s) rental index for residential properties in the private sector was up by 19.3 percent compared to a year earlier and 44 percent compared to the same quarter last year.

The property tax rate will also increase in 2024. It will go from 12 to 36 percent for non-owner-occupied houses. In 2024, AV amounts up to S$30,000 will be subject to a 12 per cent tax, while those between S$30,000 and S$60,000 are taxed between 20 percent and 28 percent.

Imagine a condominium unit in 2023 that is not owner-occupied and has a AV of S$52,000. The tax bill this year is S$7.170.00 If the AV rises from S$60,000 to S$10800 in 2024 the tax bill will increase by 51%.

The owners of multiple homes who acquired them when ABSD didn’t exist or ABSD rate was much lower, are fortunate. Singapore citizens can own up to two separate homes without having to pay ABSD.

It may look bleak for residential private landlords. The property tax bill for non-owner occupied homes is expected to increase significantly in 2024.

The annual property tax is calculated using the annual value of the property multiplied by the property tax rate.

Renting out a property to generate rental income, and potentially capital gains for some Singaporeans sounds like an excellent plan for funding retirement needs.

But there are significant obstacles in becoming a residential landlord. Private home prices are up sharply and home loans cost more due to the high interest rate.

Singapore citizens buying multiple homes pay additional buyer’s stamp duties (ABSD), which range from 20 percent to 30 percent.

Lentor Hills Residences condo

It is possible that residential property owners will have to accept the fact that property tax could continue to increase.

Singapore properties are attractive investment opportunities due to the continuous improvements made in Singapore as a destination for living, working and playing.

Singapore has a reputation for long-term thinking. Consider the land reclamation plan to create an 800 ha “Long Island” on the east coast of Singapore. This project will increase the amount of land in the city, improve the water resilience of Singapore and protect it from sea level rise.

The cost of buying a home in Singapore can become more and more expensive. Singaporeans need to look for other ways to fund their retirement, as they live longer.

Renters will have a greater choice and stronger bargaining position with the addition of housing completions on both public and private markets. Therefore, it could be difficult for residential property owners to pass on increased property taxes to their tenants.

In addition, rising interest costs can lead to higher financing expenses for some landlords. Rents could be cut by landlords who are afraid of leaving an empty unit unoccupied for a long time and having to pay higher property taxes.

Property taxes for owner-occupiers will increase in general by 2024 due to higher AVs, and increased property tax rates on higher-valued private homes. A one-time rebate on property taxes is available.

The government views property tax as an important source of revenue. Property tax has a high rate of effectiveness because it’s hard to avoid. Taxing wealth helps fight inequality and is fair, as those who have more money contribute more.

Yet, the tax burden on residential property owners is increasing at an untimely time.

The rental growth of non-landed private homes in Q3 was 0.2 percent, down from the previous quarter’s rise of 2.3 per cent.

In 2023, URA estimates that approximately 20,400 private homes (including executive condos) will be completed. It would be the highest completion rate of private housing in a single year since 2017. Total, 39,700 homes (including executive condos) will be built between 2023-2025.

Property tax relief is only a temporary measure. The property tax burden of owners who live in more expensive homes will increase. Higher property taxes may hit owner-occupiers, retirees and those who take out expensive loans.