We thank Mr Chin Kee Thou for his feedback in his letter 'Shouldn't floor area be bigger factor in property tax?' in TODAY on 5 December 2011.

Property tax is payable on all properties. The annual value (AV) of a property is used as a basis to compute the property tax payable. AV is the estimated annual rent of the property. This is also the basis for owner-occupied property, where the AV is the estimate value if it were to be rented out.

The AVs, like market rentals, differ depending on the size and location of the properties. Within the same location, the AVs of the bigger flats are higher than the smaller flats as the bigger flats can usually command higher rents.

It is also possible for smaller flats closer to the city centre (e.g., a 4-room flat in Toa Payoh) to have higher AVs than bigger flats located further from the city centre (e.g., a 5-room flat in Choa Chu Kang/Bukit Panjang/Woodlands) as their rentals are often higher. Information on prevailing rental rates can be found on HDB's website (http://www.hdb.gov.sg) > Renting a Flat > From Open Market Statistics.

For 2012, the Government has decided to give all owner-occupied HDB flats a property tax rebate of up to $55 to offset some of the increases in the property tax. With the rebate, all one- and two-room owner-occupiers will continue to pay zero property tax in 2012. Those in three-room flats will see little change in property tax payable, while those in four and five room flats and above will see increases in property tax of between $5 and $29.

We have since explained to Mr Chin that the total property tax payable for his 4-room flat for year 2011 is $108. The 2012 property tax payable for a 4-room flat of his flat type in Toa Payoh would be $113 after deducting the $55 one-off property tax rebate for owner-occupied HDB flats. The increase in his property tax is $5 from 2012.

Yvonne Yim Seon Young
Manager (Corporate Development - Corporate Communications)
Inland Revenue Authority of Singapore