Taxes to increase for wealthy homeowners in Singapore

High end property owners in Singapore will be required to pay more taxes

On Monday, authorities in Singapore announced that they will raise taxes for wealthy homeowners in order to make the tax system more effective, reported Realty Today. All changes will have come into effect by January 2014.

The tax rises are part of 2013's budget announcement.

High end property owners will be required to pay more taxes while property owners with homes of a lower annual value will be liable to pay lower taxes, according to Tharman Shanmugaratnam, the finance minister of Singapore. Taxes on vacant or rented investment properties will also rise.

The top one percent of owner-occupied homes, a total of about 12,000 units, will be required to pay higher taxes.

According to Monday's announcement, any property whose value is S$150,000 (US$121,143) or more will be liable to pay 15 percent tax in 2014. This is five percent more than the current rate.

Owners of condominiums with an annual value of S$70,000 (US$56,534), located in a central area will be liable to pay five percent more tax next year.

Owners of investment properties or luxury rentals will be liable to pay 12 to 20 percent in home taxes.

However, properties that have an annual value below S$8,000 (US$6,461) will be exempted from property tax, whereas before the announcement only properties with an annual value below S$6,000 (US$4,845) were exempted.

Property tax for non-residential buildings will remain at 10 percent.

"This is fair. The property tax is a wealth tax and is applied irrespective of whether lived in, vacant or rented out. Those who live in the most expensive homes should pay more property taxes than others," said Shanmugaratnam.

Experts have predicted that the tax changes will have little effect on foreign investment outlook in the country, according to Realty Today. Even though taxes have been increased, the absolute quantum increase is comparatively low. Experts also asserted that luxury property in prime locations will remain attractive to investors.

"By and large, I don't think you will see a major shift because the high end market, they are established neighbourhoods. The likes of (Districts) 9, 10 and 11 command certain premium. It may see some downside risk, but I don't think it will see a large impact," said Chua Yang Liang, head of research at property consultancy firm Jones Lang LaSalle.

However, Kelvin Tay, regional chief investment officer at Southern APAC, UBS, remains cautious.

"The number of foreign buyers as a proportion of total buyers has actually dropped to seven percent. If you are talking about the very high end properties, you are talking about competition from other top global cities like London, San Francisco, New York, and not just Singapore," he said.

Landlords of private homes may observe weakening demand in Singapore's rental market as a result of the new taxes, reported channelnewsasia.

"Going forward… rentals could soften because even at today's statistics – end of last year – there have been 12,000 vacant apartments. Can you imagine under the new tax regime, the landlords will have to start to look for tenants," said Colin Tan, head of research at Chesterton Suntec International.

Article source: http://www.thethailandlinks.com/2013/02/28/taxes-to-increase-for-wealthy-homeowners-in-singapore/