Ho Ren Da, 27-year old Assistant Director (Valuation) in IRAS’ Property Tax Division, cut his teeth as a professional valuer by reviewing suburban residential properties before moving on to handle valuation of the choiciest houses in Good Class Bungalow prime areas. He held this portfolio for two years and expanded his repertoire to review industrial properties.
Today, Ren Da is leading a team which looks after the assessment of low-rise industrial properties. His specialisation is in reviewing single-user industrial buildings which typically houses all kinds of companies from small local SMEs to large global MNCs.
1. What does it take to become a valuer?
Ren Da: A mix of formal training and also a passion for real estate. I learnt valuation techniques while studying in NUS Real Estate, IRAS was therefore a natural fit for me given the organisation's role as the statutory authority responsible for property tax assessment of all properties in Singapore.
Having a real estate-related degree is an advantage given the technical nature of our work. IRAS valuers will also undergo on the job training and complete courses such as the basic and in-depth property tax course by the Tax Academy of Singapore to better equip them with the skills and knowledge required to do valuation for property tax assessment purposes.
2. Why does IRAS need to value properties?
Ren Da: We need to assess the annual value of properties in order to determine the property tax payable. In Singapore, owning a property – whether it is a residential, commercial or industrial property, comes with the added responsibility of paying property tax. Property tax is a tax on property ownership and applies whether the property is occupied by the owner (owner-occupied), rented out or left vacant. This is different from income tax which is tax on your earnings, including the rental income earned from renting out the property.
Generally, a property’s annual value is the estimated market rent it is able to fetch and is also based on rents of comparable properties in the vicinity. Owner-occupied residential properties enjoy lower tax rates than those not occupied by the owner. The lower owner-occupier tax rates are to encourage home ownership in Singapore. Property tax rates on owner-occupied and non-owner-occupied residential properties are applied on a progressive scale. Non-residential properties, such as commercial and industrial buildings and land, are taxed at a single flat rate at 10% of the Annual Value.
Owner-occupier tax rates do not apply to non-residential properties even if you have bought the properties for your own use or occupation.
3. How do you go about valuing a property? Is there a standard process you take?
Ren Da: Before determining the valuation of a property, we have to collect all relevant data on it in order to make a fair and comparable-to-market assessment.
To illustrate, for newly completed buildings or properties which have undergone addition & alteration works, basic information such as site plans and building specifications are required for assessment. IRAS has a comprehensive dataset of rental information based on e-stamping records filed by taxpayers which we will then leverage on to arrive at a reasonable annual value based on the statutory act.
In addition, aside from sifting through data, we will also conduct site inspections to get a better understanding of the property that is being valued. In the course of my work, I have had the opportunity to visit numerous types of properties such as Good Class Bungalows, Data Centres and Food Factories.
4. What are the factors affecting the annual value of a property?
Ren Da: Each property has its own unique attributes. Size, condition, location – these are some factors which will affect its value during our review.
Sometimes, taxpayers may wonder why there is a difference in the property tax they pay compared to their neighbours. This could be due to differences in the attributes of the properties.
For example, a property which is newly built would generally be assessed higher than one which is older. If the property is larger, it will generally be assessed at a higher annual value too.
For industrial buildings, there are even more factors to consider such as fixed machinery which refers to machinery that has been so affixed to the land or building that it has become a fixture. Under common law, fixtures are part of the land and building and are hence subject to property tax under section 6(1) of the Property Tax Act. However, Section 2(3) of the Act provides that certain fixed machinery is not taxable. We would thus have to review whether the fixed machinery is taxable or non-taxable. Taxpayers may refer to the e-Tax Guide on the Treatment of Fixed Machinery under the Property Tax Act for guidance on the treatment of fixed machinery for property tax purposes.
5. What are some common pitfalls that property owners should look out for?
Ren Da: For new buyers, be careful of outstanding property tax liabilities on the property which you are eyeing. Before you purchase the property, file a legal requisition to view outstanding and potential tax liabilities on the property tax account as once the property is transferred, the new owner will be liable for any outstanding property tax including arrears that should have been paid by the previous owner.
Your lawyer should also assist you to apportion the current year tax between the seller and yourself. Do note that IRAS does not apportion property tax liabilities between parties.
