Annual Value

In determining the AV of a building, IRAS considers:

1. rentals of similar or comparable properties in the vicinity;
2. the size of the property;
3. location of the property;
4. the condition of the property; and
5. other relevant physical attributes.

You can refer to rentals of private residential properties at URA website (Rentals for Private Residential Developments) and rentals of HDB flats at HDB website (Rentals for HDB Flats).

The freehold market value of your land is $5,000,000.

Annual Value = 5% X $5,000,000 = $250,000

The AV of the property may be determined based on 5% of the freehold capital value.

The AV of the property may be determined using methods such as Profit's Method and Contractor's Test. This involves using costs and receipts to estimate the market rents of the properties.

IRAS would analyse the rents of comparable or similar properties that have been rented out and make adjustments to the values to account for differences in location, size, conditions and other physical attributes.

No, such expenses cannot be deducted for property tax purpose. AV is defined as the estimated gross annual rent of a property.

The AV could be higher or lower than the actual rental as the AV reflects the market rent at the time IRAS reviews the AV, whereas the actual rental could have been fixed earlier.

IRAS uses the annual market rent of comparable properties to determine the AV instead of transacted sale prices because:

1. There are generally more rental transactions than sales transactions. A higher number of transactions gives a more accurate picture of market activity.
2. The movements in sale prices are more volatile than rentals prices. Hence, using rental transactions to derive the AV helps to keep property tax more stable for property owners. Other countries like Hong Kong and Malaysia also adopt the same practice of using market rents to determine the AV.
3. Using historical purchase price to determine AV would be inequitable towards newer owners. This is because the prices of similar and comparable properties can change over time. For instance, newer owners may have a higher AV than those who bought properties in the past if properties prices increase over time.

You can object to the AV and/or its effective date within 30 days from the date of the Valuation Notice . If you do not receive the Valuation Notice, you can also object to the AV at any time in the year if you can show that the market values have dropped to below the AV. You cannot, however, object to the tax rates.

Yes. You can appeal to the Valuation Review Board (VRB) within 30 days of the notice on the outcome of your objection. You need to pay the following fees to VRB:

$50 for a residential property taxed at owner-occupier tax rates;

or

$200 for any other property.

In your appeal, you need to state the grounds of your appeal and indicate whether you are represented by any agent.