High property tax? Not for most Singaporeans

By Melissa Tan, The Straits Times, 1 Sep 2012

A REPORT suggesting that Singapore's property tax is the second highest among key cities does not reflect the amounts paid by most property owners here, the Ministry of Finance (MoF) said yesterday.

Savills, in its World Cities Review Autumn 2012 report, noted that Singapore has the second- highest property tax among a group of 10 global cities. These include New York, London, Paris, Hong Kong, Tokyo and Shanghai.

The property consultancy found that Singapore has the highest transaction and occupancy costs per year for a five-year holding period, taken as a percentage of the home purchase price.

These refer to the costs of purchasing, occupation and selling.

Savills measured these costs for a group of one middle-aged expatriate chief executive, one senior expatriate director, one locally employed director and four locally employed administrative staff. This hypothetical group of seven was used to represent a unit that would start up a business or expand a global business in any of these cities.

For occupancy, Savills said that Singapore's annual property occupation taxes can add up to £29,000, or nearly $58,000. But the $58,000 figure is higher than what most locals would pay.

About 86 per cent of all owner-occupied residential properties in Singapore have an annual value of below $20,000, MoF said, paying property taxes between $0 and $560.

For instance, the property tax for a typical five-room Housing Board flat with an annual value of $11,700 is about $228.

In contrast, the whopping $58,000 figure translates to an average annual property tax of slightly below $8,300 payable by each of the seven for each home.

The ministry said the annual value of such a home would be around $164,000, making it a "very high-end" property with an estimated market value of $7million.

Such homes fall within the top 0.1 per cent of all owner-occupied residential properties in Singapore.

Savills focused on the costs that foreigners investing in the Singapore property market are likely to have to bear. For instance, it factors in the additional buyer's stamp duty (ABSD) of 10 per cent that foreigners incur when buying houses here.

But for Singaporeans, the most ABSD they will have to pay is 3 per cent, which applies if they are buying their third or subsequent homes.