At a glance...
A property’s Annual Value is the estimated gross annual rent that could be earned if it were to be rented out, excluding furniture, furnishings and maintenance fees. This is determined by IRAS, and you can check your property’s Annual Value online.
In DPM (then-Finance Minister) Lawrence Wong’s speech on the Budget 2022 in February, it was announced that property tax rates would increase. On the bright side, this only applies to properties with an Annual Value of over $30,000. Naturally, the next question is – how do I know what my property’s Annual Value is?
It’s good to know how to estimate it because it’ll also impact other things, like your GST voucher (which will be a recurring thing, by the way!).
What is Annual Value?
According to the IRAS website:
The Annual Value (AV) of a property is the estimated gross annual rent if it were to be rented out, excluding furniture, furnishings and maintenance fees.
A quick worked example: if you rented out a 3-room HDB flat for $2,000 a month, your gross annual rent earned would be $2,000 x 12 = $24,000. Then, you’ll need to subtract the costs of furniture, furnishings and maintenance fees, so your AV could be something like $16,000.
Annual Value of Your Property
But… isn’t that really subjective? What if I just happened to get ‘low-balled’ that one time? Or how would IRAS know the cost of my furniture?
The AV of each property is determined by IRAS. They do this by studying similar properties in the same area or development. They then take the average gross annual rent of those properties.
So you might not be renting out your 3-room flat, but perhaps some of your neighbours who also own 3-room flats are renting out theirs – one at $2,200 a month, one at $1,800 a month. In this case, it would be likely that the AV of all the 3-room flats near you (including yours) is somewhere around $16,000 too.
This doesn’t mean you should go around asking your neighbours how much they are charging for rent. Anyway, IRAS doesn’t publish their methodology for calculating the cost of furniture, furnishings and maintenance fees to be deducted from the gross annual rent. And since they’re the ones who make the final decision on the AV of your property, the easiest way to find out your property’s AV is to check their website.
Check your property’s current AV by logging into the IRAS MyTax Portal and navigating to “View Property Portfolio”.
Annual Value of Other Properties
Some people are kaypoh and want to know the AV of other people’s properties. You can still check the AV of a specific property that you don’t own on the IRAS website, for a fee of $2.50.
However, if you’re just trying to get a rough gauge of the typical values, here are the median Annual Values as of 2020 (source: HDB):
|Property Type||Median Annual Value|
|1-Room or 2-Room HDB||$5,100|
|Executive and other HDB types||$10,680|
|Non-landed private property (includes Executive Condominiums)||$22,200|
|Landed private property||$34,800|
Note: The values provided by HDB did not change from 2017 to 2020, but will be updated from this year onwards. Read on to find out why.
How Often is the Annual Value of My Property Updated?
A review of the Annual Value of properties is conducted by IRAS at least once a year. This is to keep up with the changes in the housing rental market.
Interestingly, the Annual Values of HDB flats stayed the same from 2017 to 2021. However, they have since risen by between 4% and 6% with effect from 1 January 2022, reflecting the recent increase in the market rates. 4-room flats in Tampines used to be rented out for $2,000 a month on average in 2017, but this has increased by about 10% to $2,200 in 2021.
Also, if your property undergoes a physical change (such as a major renovation) that could have a significant impact on its rental value, IRAS will update your AV from the date of the change.
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Why Do I Need to Know the Annual Value of My Property?
Knowing your property’s Annual Value is important for two primary reasons:
1. Property Tax
The AV of your property has an impact on the property tax you will need to pay. With a high AV comes a high property tax.
Do note that property tax is different for owner-occupied properties and non-owner-occupied properties (a.k.a. investment properties). Property tax for non-owner-occupied properties is higher. Meanwhile, owner-occupied properties are completely exempt from property tax if their Annual Value is $8,000 or less. As a result, most people staying in 1-, 2- and 3-room HDB flats are not required to pay any property tax at all.
2. GST Voucher
The annual GST voucher is also affected by your property’s Annual Value. If your property’s AV is $13,000 or less, you will be eligible for larger pay-outs in the Cash and MediSave components of the voucher. This means that most HDB residents will be eligible for the higher tier.
If you are looking to refinance your home loan head over to the ROSHI loan marketplace where you can launch an application for free.
This article was adapted from Mortgage Master.