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Annual Value (AV) Of Your Residential Property: Here’s How Its Calculated And Why It Matters

The Annual Value (AV) of your place of residence has a large impact on the amount of government support you receive.

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.

Read Also: Self-Employed Person Income Relief Scheme: Are You Eligible To Receive $1,000 A Month For 9 Months?

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. 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, chargeable at $2.50 per lookup.

Read Also: 6 Things From Singapore Budget 2022 That Will Affect You Financially

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.

Read Also: What The Monetary Authority Of Singapore (MAS) Does VS What The Ministry Of Finance (MOF) Does

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.

For owner-occupied property (i.e. you live in the property), the tax rate is lower.

For example, a private property with an annual value of $22,200 will pay a property tax of $568. A 5-room flat with an annual value of $10,380 will pay an annual property tax of $95.20.

From 2023 and 2024, this tax rate will be revised:

However, for non-owner-occupied property, the property tax rate will be significantly higher.

A non-owner-occupied private property with an annual value of $22,200 will pay a property tax of $2,220. A non-owner-occupied 5-room flat with an annual value of $10,380 will pay an annual property tax of $1,038.

From 2023 and 2024, this tax rate will be revised:

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 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 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 an HDB room for the same price.

Based on government data, the median AV of all HDB flats in Singapore is $10140 in 2021, an increase from $9,600 in 2021. Here’s a breakdown by property size and type:

Type of Property  Median Annual Value (2020)
1 or 2 Room $5,340
3 Room $8,220
4 Room $10,140
5 Room $10,980
Executive & Other $11,340
Non-Landed $23,400
Landed $37,200

To account for the increase in market rents of HDB flats and private properties, residential property AVs will be revised from 1 January 2023.

If your property’s Annual Value is affected, IRAS will send a Valuation Notice to inform about any upward (or downward) adjustment of the AV and the date when it is to take effect.

For owner-occupied properties, the government will provide a one-off rebate, about 60% of the 2023 Property Tax Bill, up to $60 to mitigate the increase. This will be automatically offset against any property tax payable.

According to IRAS, all one-room and two-room owner-occupiers will continue to pay no property tax as their revised AVs will remain below $8,000. For other owner-occupied properties, the revised property tax after rebate will apply:

Read Also: Guide To Property Tax For Homeowners In Singapore

This article was first written in March 2020 and has been updated.

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