30 September 2020

Paying lesser property tax on multiple properties

Property tax is something we have to pay when we own any property. The owner-occupied property incurs less tax than one that is not owner-occupied. 

Let's you own Property A, for which IRAS has assessed the Annual Value at $18,000, then:  

  • If it is owner-occupied, the first $8,000 is tax-free. The next $10,000 @ 4% will incur $400.  
  • But if it is non owner-occupied, then the tax is $18,000 @ 10% = $1,800.

And if you also own Property B, for which the Annual Value is $24,000, then:
  • If it is owner-occupied, the first $8,000 is tax-free. The next $16,000 @ 4% will incur $640.
  • But if it is non owner-occupied, then the tax is $24,000 @ 10% = $2,400.
Clearly, it makes sense to be paying property tax on Property B (which has a higher Annual Value) as owner-occupied, and Property A as non owner-occupied.  The total property tax is then $640 + $1,800 = $2,440.  The reverse would have incurred total property tax of $400 + $2,400 = $2,800.

Getting the switching done is pretty straightforward and fuss-free. Just proceed to IRAS website to effect the change. IRAS will automatically refund the excess if you have overpaid. Totally fuss-free.

Above is my simplistic understanding. The taxation levels are actually different if you own higher-end properties. Check out IRAS website for official information.



 

3 comments:

Anonymous said...

i dont it is legal

David said...

But it actually depends on which property you stay in.

Is it legal to just switch like you mentioned?

Lizardo said...

Totally legal if you're staying in that property. So this is something for those moving house to transfer at the earliest opportunity.