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 vouchers and other social support schemes.
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 The Annual Value Of A Property And How Is It Calculated?
In concept, a property’s Annual Value (AV) is the estimated gross annual rent that can be collected if it is rented out, excluding furniture and 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, property condition, location, and 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 physical changes are made to the property that would have a material impact on the AV, IRAS would also review and adjust it accordingly. For example, if you buy an old, existing landed property and rebuild it, you can expect the annual value of the property to increase.
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, which is chargeable at $2.50 per lookup.
Appealing Against Annual Value Of Property
If for any 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 Will Determine How Much Property Tax You Pay
The primary purpose of annual value is to determine how much property tax you should pay on your property. Think of AV as similar to employment income. The higher the AV of the property you own, the higher the property tax would be.
The tax rate is lower for owner-occupied property (i.e., you live in the property).
Here is the property tax rate for 2023.
For example, a private property with an annual value of $22,200 will pay a property tax of $880. A property with an annual value of $40,000 will pay a property tax of $1,380.
For 2024, the property tax rate will be higher. A private property with an annual value of $22,200 will pay a property tax of $880. A property with an annual value of $40,000 will pay a slightly higher property tax of $1,480.
However, the property tax rate will be significantly higher for non-owner-occupied property.
A non-owner-occupied private property with an annual value of $22,200 will pay a property tax of $2,420 for 2023. For 2024, this would increase to $2,640.
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 a home are 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 consider this 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 an HDB room for the same price.
Based on government data, the median AV of all HDB flats in Singapore is $12,480 in 2022. Here’s a breakdown by property size and type:
|Type of Property||Median Annual Value (2022)|
|1 or 2 Room||$6,540|
|Executive & Other||$14,220|
To account for the increase in market rents of HDB flats and private properties, residential property AVs will be revised from 1 January 2024. If your property’s Annual Value is affected, IRAS will send a Valuation Notice to inform you about any upward (or downward) adjustment of the AV and the date when it will take effect.
This article was first written in March 2020 and has been updated with the latest information.
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