But this does nothing to alleviate the fact that ~106,181 freehold properties enjoy unaccounted $2.03B (FH property appreciation) p.a.
http://moral-property.blogspot.com/2007/09/s203b-pa-naughty-business.html Taxman raises HDB property value, most unaffected for now
Tuesday • November 13, 2007
The annual values of most properties — including HDB flats — are going up, but while owners of most private homes will be paying more taxes on their properties next year, HDB flat owners will largely be insulated from the taxman's move.
The annual value is the estimated annual rent of a property if it were to be let. In determining the annual value of a property, the Inland Revenue Authority of Singapore (Iras) is guided by prevailing market rents.
The property tax rate is currently set at 10 per cent of the annual value of the property. For owner-occupied homes, a concessionary rate of 4 per cent applies.
The Iras said the average increase in the annual value of private residential properties is about 20 per cent. This is broadly in line with the rise in real estate prices reflected in data from the Urban Redevelopment Authority (URA).
According to the URA, private home prices were up an average 8.3 per cent in the third quarter from the previous three months. Compared to the end of last year, private home prices averaged 22.9 per cent higher.
"Every year the Iras will assess the situation Â… They are increasing it because rentals have gone up," said Mr Eugene Lim, assistant vice-president at real estate agency ERA.
"We are already seeing a trend of HDB owners renting their flats out and the rental market has picked up. In that sense, the Government will look at ways to ensure those who benefit pay their dues," said Mr Donald Han, managing director of property consultancy firm Cushman and Wakefield.
The Housing Development Board (HDB) Resale Price Index rose 6.6 per cent in the third quarter and was up 11 per cent from the end of last year.
However, most HDB flat owners will enjoy a two-year reprieve from higher property taxes, even though the Iras will be raising the annual values of all HDB flats from Jan 1.
"The amount does impact the dwellers, but because there is a system of rebates and preferential rates applied to home owners, the tax increase will be mitigated," Mr Han said. "The increase will only be felt by those who lease out their premises."
As part of the offset package for the Goods and Services Tax announced in Budget 2007, all owner-occupied residential properties will be given an additional tax rebate of up to $100 per year in 2008 and 2009. As a result, 90 per cent of all HDB flat owners will not be paying more property tax next year, the Iras said.
According to the Iras, one and two-room HDB flat owners will not have to pay property tax next year, as well as 60 per cent of three-room flat owners. The other 40 per cent of three-room flat owners will pay less tax than they did this year.
For the four- and five-room HDB flat owners, 15 per cent will have to pay higher taxes but the increase will be less than $40, the Iras said.
Meanwhile, in Parliament yesterday, National Development Minister Mah Bow Tan said the Government would not be taking further action to cool the property market.
Last month, the Government announced that it would scrap the deferred payment scheme for private property purchases in a move to reduce speculative buying and stabilise the red-hot real estate market. Mr Mah said removing the scheme would not affect genuine home buyers.
Mr Mah also assured Singaporeans that there would be enough new housing to meet the demands of a growing economy and population.
"At the end of the third quarter of 2007, there was a supply stock in the pipeline of 65,000 units. This, in fact, is higher than the supply at the end of the second quarter of 56,000 units. If Singaporeans are aware of these figures — and these are numbers that we put out regularly — there is no reason for Singaporeans to panic and feel that there is a real shortage in the medium term."
Mr Mah added that while the Government would seek to balance the supply and demand in the long term, its "bias is not to over-regulate or interfere" with the market.
"We monitor the growth rate of the market in relation to the growth of the economy and growth is supported by economic fundamentals," he said.
The National Development Minister added that more sites would be put up in the Government Land Sales Programme in the first half of next year if necessary. But this will be done carefully so as not to create an oversupply situation in the longer term.
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