In Singapore, there are generally two metrics that the government uses to assess how well-off you are: your income and the Annual Value (AV) of your home. These two metrics are key criteria when deciding if (and how much) you will receive from schemes like GST Voucher and the newly-announced Self-Employed Person Income Relief Scheme (SIRS), as well as deciding how much income tax you’ll need to pay.
While assessable income is relatively straightforward, there’s greater confusion over the concept of Annual Value, and how it is calculated. So let’s dive into it and demystify it once and for all.
What Is Annual Value Of A Property And How Is It Calculated?
In concept, the Annual Value (AV) of a property is the estimated gross annual rent that can be collected if it is rented out, excluding furniture, maintenance costs.
The Inland Revenue Authority of Singapore (IRAS) is the government body responsible for determining the AV of properties. When making AV estimates, IRAS uses factors like rentals of comparable properties in the vicinity, property size, condition of property, location, and among others.
It is important to note that a property’s AV is based on IRAS’ valuation criteria and isn’t based on actual rental income received from the property. Thus, a property’s AV does not change, whether the property is owner-occupied, rented out, or vacant.
Normally, IRAS would review the AV of properties annually to reflect changes in the rental market and inform property owners of any revision to their property’s AV. However, if there are physical changes made to the property that would have a material impact on the AV, IRAS would also review and adjust it accordingly.
Property owners can check the AV of their own property at no cost using the View Property Portfolio e-Service on IRAS’ website. You can also check the AV of any other properties in Singapore using the Check Annual Value of Property tool, chargeable at $2.50 per lookup.
Appealing Against Annual Value Of Property
If for some reason you disagree with IRAS’ (high) valuation of your property’s AV, you can file an objection with IRAS within 30 days from the date of the Valuation Notice informing you of the AV of your property, or at any time if you wish to object to your property’s AV as shown in IRAS’ property Valuation List.
However, for your objection to be valid, it must be over the AV valuation criteria as outlined above, and not because you deem your tax rate too high or you’re currently facing financial hardship.
If you still disagree with IRAS’ decision after you filed an objection, you can still make a final appeal to IRAS’ boss, the Ministry of Finance.
Annual Value Of Home And Its Implication On Government Schemes
Only property owners need to pay property tax, which is affected by the property’s AV.
Since the principle of government aid schemes is to give the greatest support to those who need it the most, income and Annual Value of home is commonly used as a proxy for wealth.
For government schemes that take AV into account, your AV will be based on the AV of the place of your residence (as per your NRIC), whether you’re living with your parents or you’re a tenant renting a room.
Tenants can probably take this into account if they want to enjoy the greatest amount of government support, such as deciding between renting a small room in a landed property or renting HDB room for the same price.
Based on government data, the median AV of all HDB flats in Singapore is $9,600 in 2018. Here’s a breakdown by property size and type:
|Type of Property||Median Annual Value|
|1 or 2 Room||$5,100|
|Executive & Other||$10,680|
This means, the majority of self-employed individuals living in HDB flats (even large ones) will likely be eligible for the newly-announced SIRS, which has a AV criteria threshold $13,000 and below.
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