$75m relief for home owners

HUNDREDS of thousands of home owners will get a one-off 40 per cent property tax rebate this year.

The rebate is for owner-occupied residential homes and will cost the Government $75 million.

This move is even more drastic than the 15 per cent property tax rebate given in the 1998 Budget that followed the Asian financial crisis, noted Ernst & Young’s director of human capital and tax services, Ms Wu Soo Mee.

Market watchers welcomed the move. ‘This is one that will reach out to the widest number of people, whether you own a public or private property, and will go a long way in helping struggling households this year,’ said PropNex chief executive Mohamed Ismail.

Mr Eric Cheng, executive director of HSR Property Group, calculated that the average household could save ‘a few hundred dollars’ a year on property tax.

Owners who live in their home pay 4 per cent property tax on the annual value of their property.

A 40 per cent rebate means owners now pay 2.4 per cent tax on their lived-in properties. In the 1998 Budget, the rebate meant home owners paid 3.4 per cent, said Ernst & Young’s Ms Wu.

‘It’s a big relief and will definitely help everyone in this recession,’ she said.

The income tax on a property’s net annual value (NAV) has also been scrapped, with effect from the 2010 year of assessment.

NAV is the annual value, shown on your property tax bill, of your property in Singapore minus allowable expenses.

The annual value is the gross amount at which the property can be expected to be rented from year to year.

Under current tax rules, if the NAV of an owner-occupied residential property is less than $150,000, it is exempt from income tax. This exemption will not be available to your investment property and any rental income you derive will also be subject to income tax.

After yesterday’s changes, those who own higher-value homes, or those who own second homes but do not collect rent for it, no longer have to pay income tax on the NAV of their property.

Ms Wu noted that this benefits higher-income families, as most home owners do not own properties that have a NAV above $150,000.

HSR’s Mr Eric felt that while the measures will not have any direct impact on the market, it will give home owners much-welcomed monetary relief in the light of the difficult economic times.

Source: Straits Times - 23 Jan 2009