What is the Annual Value of a property and how do I check mine?

The Annual Value of your property helps the government decide the wealth of a household. Based on this and other criteria such as assessable income, the government decides how much it should give and take from us folks. Examples of “give” come in the form of Covid-19 income relief schemes and GST vouchers, while “take” refers to the property tax each of us needs to fork out every year.

In short, it’s always good to know the Annual Value of a home, especially if you’re about to buy or rent that property.

But what is the definition of the Annual Value of a property, and how is it calculated? Let’s find out.

What is the Annual Value of a property (AV)?

Every property has an Annual Value. The straight-up definition of the Annual Value (AV) of a residential property is the estimated gross annual rent that a homeowner can collect if he/she rents out the property. This is excluding furnishings, furniture and maintenance fees.

The Inland Revenue Authority of Singapore (IRAS), which determines the AV of properties in Singapore, additionally clarifies that AV is determined “based on estimated market rentals of similar or comparable properties and not on the actual income received”.

IRAS also updates the AV of properties on an annual basis to reflect changes in the rental market, and sends owners a Valuation Notice to inform them of any revision to their property’s AV. IRAS additionally takes into account physical changes—such as a major upgrade of an HDB block—that would impact a property’s Annual Value.

Here’s a case study of how the Annual Value of a residential property is calculated for an individual

Andy owns a three-bedroom condo unit at Tanah Merah with a floor area of 1,200 square feet (sq ft). Originally an owner-occupier, Andy now rents out the whole unit, fully furnished, at $3,800 a month.

To calculate the Annual Value (AV) of Andy’s property, IRAS uses the market rentals of similar or comparable properties within his development. This includes those of the same unit type, with roughly the same floor area within the same condo.

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Let’s say there are five comparable rentals with amounts ranging from $3,400 to $3,700. IRAS considers these other rental transactions (not Andy’s) and discounts the cost of furnishing, furniture and maintenance fees. This actually reduces the actual value per month to about $2,000, ultimately giving Andy’s property an Annual Value of $24,000 (i.e. $2,000 x 12 months).

Whether Andy is an owner-occupier or a landlord, the AV remains the same. The only difference is that, it would be taxed less if it is owner-occupied, rather than being rented out or left vacant.

(Note that most government schemes and subsidies also exclude those who own two or more properties. Also, an AV of $24,000 in this case would make anyone living in that property ineligible for recent schemes such as the Self-Employed Person Relief Scheme (SIRS) ⁠—even Andy’s adult son⁠—although an appeal might be possible.)

How does my property’s Annual Value compare to others?

The Singapore government publishes median Annual Values for all types of residential property in Singapore. Here are the median AVs for HDB flats and private residential properties for 2020. (As of this update, the figures for 2021 have not been published yet.)

Note the wide gap between the AV of HDB flats and the AV of private property. Typically, an AV of $10,000 or less will cover all those who stay in a 1, 2, 3-room HDB flat and most residents of 4-room HDB flats. An AV of between $10,000 and $15,000 will cover most of those staying in 5-room HDB flats and less valuable private properties. An AV of more than $25,000 includes the top 10 per cent of the population who stay in more valuable private properties.

Increase in Annual Value of property in 2022

Take note that as part of its annual review, IRAS will increase the Annual Value for both HDB and private residential properties in 2022. This means that most owners can expect to pay for higher property tax come 2022.

For HDB owners, the increase will be 4 per cent to 6 per cent with effect from Jan 1, 2022, in line with the increase in market rentals. The last revision for the AVs of HDB flats was in 2017.

Here’s a summary of the property tax increase payable.

How can I check the AV of a property?

You can check the AV of your own property free of charge using the View Property Portfolio e-Service on IRAS’ website. Other than that, you can also check the AV of any other property in Singapore using the Check Annual Value of Property tool, with a fee of $2.50 per lookup.

What if I disagree with the AV of my property?

If you want to dispute the AV that IRAS has assigned to your property, you may go to the Object to Annual Value service on IRAS’ tax portal to file your objection. You can do so within 30 days from the date of the Valuation Notice.

Alternatively, you may object to the AV of your property as shown in the Valuation List (VL) at any time of the year, by Dec 31 of the year of the VL.

Take note that IRAS doesn’t consider the following as valid grounds for objection:

• Tax rates are too high
• There is no rental income as the property is owner-occupied
• Financial hardship

If you’re unsatisfied with the outcome of the appeal, you may choose to appeal further to the Valuation Review Board at the Ministry of Finance within 30 days (although we’ve yet to personally hear of someone taking such a big issue with his/her home’s AV). The appeal fee is $50 for owner-occupiers of residential properties, and $200 for other property types.

ALSO READ: Property tax for HDB flats to increase, payment due in Jan

I bought a house. Will the government consider the AV of my new home or my old one?

For homebuyers, your new address is automatically updated with IRAS for property tax filing purposes. Your property tax, which is to be paid by Jan 31 each year, is based on the property you own/owned in the previous year.

If you have sold your old home, your buyer may need to reimburse you a portion of the property tax that you already pay. Your lawyer or HDB officers (for HDB flats) will assist you with this.

If your home is a newly completed property, the AV will be available within one year of the Temporary Occupation Permit (TOP) issuance.

For purposes of receiving government schemes, vouchers and payouts, the AV is based on your NRIC.

This article was first published in 99.co.