A lower property tax may help retirees, but they must also be mindful of the costs involved in owning private residences

The said retiree would be able to raise money if he downgraded from his private home into an HDB apartment.

HDB offers a wide range of spacious flats in prime locations. HDB townships have good transport accessibility and comprehensive amenities, such as healthcare facilities and recreational facilities.

However, moving house can be stressful. Especially for those over 70 or 80. Will they be able adapt to the new environment well? Will moving cause them to suffer mental problems?

In addition to stamp duty costs, there are legal fees, agents fees, renovation expenses, relocation expenses, and other expenses that come with a move from one owner occupied home into another.

Take, for instance, the owner/occupier of an apartment whose AV grew by 30 per cent in just three years from S$54,000.00 in 2022 up to S$70,000.00 in 2024.

Due to the adjustment in AV bands and assuming the AV of S$70,000 is in 2025 the annual tax on property is reduced by 27% from S$5,080 up to S$3,720.

In this example, however, the owner-occupier will have to pay more than S$2,080 in property taxes in 2025.

The homeowner tax rate on homes went up from 0-16% in 2020 to 0-23% 2023 to 0-32.5% in 2024. Home with higher AVs will have higher tax rates.

Some Singaporeans who are older have assets that they can’t afford to pay for. A local retiree of over 60 may own a house purchased many years ago that has grown in value.

The retiree in question, whose primary asset is his home that he owns, may be unable to generate enough cash flow for all the expenses associated with home ownership.

The above scenario is a case of a first-world issue.

The retired person could rent out the room in order to generate income.

When taking in tenants, the retired person may have concerns about safety or privacy. It may be that the retiree wants to leave a designated space available for children and grandkids whenever they visit.

The government considers property tax to be a primary source of income tax. Property tax is effective because it can be difficult to avoid. Taxing income is a fair way to combat inequality.

In the budget for 2024, rates on residential property owned by non-owners were not changed.

To fund the increased expenditure on healthcare, and other services, it is important to keep raising residential property taxes.

In the future, property tax rates could increase for non-owner occupied homes as well as more expensive homes.

The property tax may not even have needed to be lowered for the owners of high-end private homes. Due to the change of AV bands, an owner-occupier whose high-end home has AV worth S$150,000 would see their property tax reduce by 21 per cent in 2025 from S$27.980 S$22.220.

Ownership of private homes and their costs

Owner-occupiers’ residential property tax may be increasing in the future. If the AV rises, so will the property tax.

To age with dignity it can be important to own a fully-paid up home at retirement.

CPF Life’s fixed annuity can be useful in funding retirement due to the increasing life expectancy.

Retirement home owners should still be concerned about the increasing costs of owning a house, which includes property taxes.

A fixed annuity can’t cover all expenses during retirement.

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When planning for retirement, it may be important to consider whether or not one can afford the home they own.

The right-sizing of a homeowner-occupied home can be done pre-emptively when you still have energy to move. This will help you both to minimize the risk that property tax rates may rise and to age with dignity.

Hopefully, property tax rates can be kept low for home owners. Some people might want to hang on to their loved private homes so they can enjoy their golden decades.

In the end, seeing people retire in Singapore and enjoy their retirement in private homes after years of work may encourage younger Singaporeans to continue to work hard.

Property Tax Reform

Private home owners and retirees breathed a collective sigh when Finance Minister Lawrence Wong revealed in Budget-2024 that owner-occupier residential real estate tax rates would be raised.

The threshold for AV at the lower end will rise from S$8,000 to S$12,000 on Jan 1, 2020, and the upper band will go up from S$100,000.00 – S$140,000. Adjustments will be made in bands between.

The estimated gross annual rental of a property, excluding furniture and furnishings, is its AV.

Inland Revenue Authority of Singapore has also announced a 24-month plan for those who own high-end homes and are facing cash flow difficulties when it comes to paying property taxes.

AV Bands will reduce property tax for many home owners in 2025.

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