Property Tax on HDB flats is going up

From January 1 next year, the Inland Revenue Authority of Singapore (Iras) will be raising the Annual Values (AVs) of all HDB flats. This translates to an increase in property taxes for 2010.

In line with this, all Housing Board owner-occupiers will be given a one-off property tax rebate of up to $120 to help mitigate the increase.

Iras, which reviews the AVs of all properties, including HDB flats, annually to ensure they reflect prevailing market rental values, said it will raise the AV of all HDB flat types as current values of HDB rentals and resale prices are 'significantly higher than levels observed in 2007'.

The last such revision for HDB flats was done two years ago on Jan 1 2008, based on rental values in 2007.

AVs for HDB flats were not revised on 1 January 2009, notwithstanding that HDB rentals had increased significantly (by between 31% and 37%) in 2008 relative to 2007. The adjustment in AVs was deferred in view of the uncertainty in market rental trends in the midst of the economic recession. There was evidence of declines in rental values from late 2008, with the risk of further significant declines in 2009 given the negative economic outlook at the time.

HDB rentals have stabilised after a moderate decline from late 2008 to the middle of 2009, and have since begun to rise. As a result, current values of HDB rentals, as well as HDB resale prices, are still significantly higher than levels observed in 2007. The AVs of HDB flats will therefore have to be adjusted.