IRAS will be updating the annual value (AV) of HDB flats in accordance with increases in market rents, thus most HDB flat owners may expect to pay more in property taxes in 2022.

The AV will be raised higher by 4% to 6% with effect from January next year, according to an Iras statement released on Wednesday (Dec 1). This is part of Iras’ yearly examination of properties to calculate the property tax due.

Owner-occupiers of one-room and two-room flats will continue to pay no property tax as a result of the AV modification.

This will likewise be the case for 35% of three-room flat owners, while the remaining 65% of three-room flat owners will each pay between $8 and $14 extra yearly.

In 2022, owners of four-room, five-room, and executive flats will each pay an additional $21 to $26 in yearly property tax.

To estimate the AV of properties, Iras claimed it examines market rental patterns.

AV is the expected annual rent for the property if it were to be leased out, and it is calculated using market rates for similar properties.

Since the latest review in 2017, the AV of HDB apartments has remained constant.

With growing market rentals for HDB apartments this year, Iras stated that the AV of all HDB flats would need to be increased higher starting January 1 next year.

According to the authorities, the property tax due is calculated by multiplying the property tax rate by the AV of the property.

Owner-occupiers pay property taxes at a reduced rate of 0% to 16%, whereas those who rent out their apartments pay property taxes at a higher rate of 10% to 20%.

It was also said that the tax rates are progressive, with high end properties being taxed at greater rates.

After a $21.60 rise in yearly tax due from 2021, owner-occupiers of a four-room apartment would pay between $73.60 and $121.60 in property tax next year. In contrast, the yearly tax increase for owner-occupiers of executive units will be $26.40 beginning in 2021.

Owner-occupied HDB apartments are subject to a tax rate of up to 4%, whereas non-owner-occupied flats are subject to a tax rate of 10%.

Property tax invoices will be sent to all property owners by the end of December, and they must pay by January 31.

Property owners who do not pay their tax in Giro instalments by the due date will face a 5% penalty.

Property owners in financial distress should contact Iras for help by January 31 to arrange a feasible payment plan.