The property tax for non-owner-occupied residential properties as well as other properties will remain at a flat rate of 10% of AV.
As a result of the rate change, all owner-occupied homes will enjoy tax savings of $240due to the exemption of the first $6,000 of AV. Owners of high-end properties will see increases in tax payable as follows:
WORKINGS OF THE NEXT TAX RATES
| Household A AV of $80,000 |
Household B AV of $120,000 |
|
| 1st tier | $6,000 = $0 | First $6,000 = $0 |
| 2nd tier | $59,000 x 4% = $2,360 | $59,000 x 4% = $2,360 |
| 3rd tier | $15,000 x 6% = $900 | $55,000 x 6% = $3,300 |
| New Tax Payable | $3,260 | $5,660 |
| Old Tax Payable | $80,000 x 4% = $3,200 | $120,000 x 4% = $4,800 |
| New Tax Rate | $3,260 | $5,660 |
| Difference in tax | Household pays $60 more | Household pays $860 more |
[2] REVISED LOAN-TO-VALUE (LTV) RATIO
A home buyer will have to fork out more cash to buy a property with the latest change in the stamp duty rules. Besides, he will reap a smaller profit if he sells it within a year. Take, for example, a buyer who pays $1 million for a home before the rules changed and sold it in less than a year for $1.1million.
BEFORE THE NEW MEASURES
The buyer could enjoy LTV of 90% - so he could purchase the property with only $100,000 as a down-payment. By selling, he would have made a fast $100,000, less the stamp duty he paid when he bought the property - $24,600 under the stamp duty formula. That means he would pocket a profit of $75,400. [Return on capital: 75,400/100,000 = 75.4%]
AFTER THE NEW MEASURES
The buyer can only enjoy LTV of only 80% of the price which means a down-payment of $200,000. He would have made $100,000 minus his original buyers' stamp duty ($24,600), and now minus an additional sellers' stamp duty, of $27,600. This means a greatly reduced profit of $47,800. [Return on capital: 47,800/200,000 = 23.9%]
REVISED HDB POLICIES
On 5 March 2010, the Ministry of National Development introduced a series of measures to ensure financial prudence and to prevent ethnic enclaves in Singapore. This is hot on the heel of an earlier round of measures which saw the implementation of seller's Stamp Duty for private properties sold within a year of its purchase; and the introduction of a three-tier property tax rate.
