Many people are unaware that they may be able to deduct certain expenses related to their income property on their taxes. This can be a significant amount of money, so it’s important to be aware of what you can and can’t deduct. You may want to know how much of your current property taxes are deductible. What else can you deduct? In this article, we will look at the income tax deduction property tax and discuss the non-tax deductible properties in Singapore.
What is property tax?
Property tax is a tax that is levied on real property by the government. The tax is based on the value of the property and is typically paid by the owner of the property. Property tax can be used as a deduction on your income taxes if you own income property.
What is a Property tax deduction?
A property tax deduction is an expense that can be deducted from your taxable income when you file your taxes. This deduction can be claimed for any expenses related to the ownership and upkeep of your property, including mortgage interest, insurance, repairs, and improvements.
What property is Tax deductible in Singapore
As a property owner in Singapore, you may be wondering what kind of income property tax deductions are available to you. Here’s a quick rundown of some of the most common deductions:
- Rental Income: Any income you earn from renting out your property is tax deductible. This includes rent from both residential and commercial properties.
- Property Taxes: You can deduct any taxes you pay on your income-producing property, including local property taxes and stamp duty.
- Mortgage Interest: If you have a mortgage on your income-producing property, the interest payments are tax-deductible.
- Maintenance and Repair Costs: Any costs incurred in maintaining or repairing your income-producing property are tax deductible. This includes things like painting, repairs, and pest control.
- Insurance premiums: You can deduct the cost of any insurance premiums you pay on your income-producing property, including fire, flood, and contents insurance.
What properties are non-tax deductible in Singapore
There are a few properties that are non-tax deductible in Singapore. These include investment properties, commercial properties, and industrial properties.
How to calculate property tax in Singapore
Property tax in Singapore is calculated based on the value of your property. The amount of tax you pay depends on the type of property you own and the assessment rate set by the government.
To calculate your property tax, you need to know the following:
The value of your property: This is determined by the Inland Revenue Authority of Singapore (IRAS).
The assessment rate: This is set by the government and can change from year to year. For 2020, the assessment rates are 0.7% for landed properties and 10% for non-landed properties.
The type of property you own: Landed properties include bungalows, terrace houses, semi-detached houses, shophouses, and Good Class Bungalows. Non-landed properties include apartments, condominiums, and HDB flats.
Once you have this information, you can calculate your property tax using the following formula:
Property Tax = Value of Property x Assessment Rate
For example, if you own a landed property with a value of $1 million and the assessment rate is 0.7%, your property tax would be $1 million x 0.007 = $7,000.
Tax Rates
Property tax rates on owner-occupied and non-owner-occupied residential properties are applied on a progressive scale. All other properties are taxed at 10% of the Annual Value.
Owner-occupied Property tax
Owner-occupied properties refer to those residential properties such as HBD flats, condominiums, or other forms of residential properties where the owners reside in the property. The income tax rates for owner-occupied properties are as shown in the image below:
Owner-occupied Property Tax Rates in Singapore – from 1st January 2023
Image source: IRAS
Owner-occupied Property Tax Rates in Singapore – from 1st January 2024
Image source: IRAS
Non-owner-occupied Property tax
Non-owner-occupied properties refer to those residential properties such as HBD flats, condominiums, or other forms of residential properties where the owners do not reside in the property. The income tax rates for non-owner-occupied properties are as shown in the image below:
Non-owner-occupied Property Tax Rates in Singapore – from 1st January 2023
Image source: IRAS
Non-owner-occupied Property Tax Rates in Singapore – from 1st January 2024
Image source: IRAS
Conclusion
Property Tax is a valuations process performed by the government to determine the amount of tax owed on a property. By determining a property’s value, the government can balance the tax burden among similar properties in that area. It is your responsibility to ensure that you pay income tax annually, as well as any additional fees such as service and conservancy charges. In addition, you are also responsible for collecting receipts for all purchases you make for your property and its maintenance.