03 March 2013

Policy Contradiction — Property Tax Concession for Unoccupied Properties

Property tax is a tax on the ownership of property.  It is not an income tax which taxes the rental income received by a property owner.  It is payable by all property owners on the properties owned by them, regardless of whether the properties are let out, owner-occupied or left vacant by them.  As long as a person owns a property, he or she is required to pay property tax.[1]

Contradiction
Notwithstanding the above, Section 8 of the Property Tax Act (Cap. 254) provides that where property tax has been paid under the provisions of the Act in respect of any building, the Comptroller shall refund a part of the tax proportionate to any period of not less than 30 days or a calendar month during which the building is unoccupied, provided that no refund will be allowed unless —

(a) the building is in good repair and fit for occupation;

(b) every reasonable effort to obtain a tenant has been made;

(c) the rent demanded is a reasonable one; and

(d) the building has been vacant during the whole of the period.

Tax relief for vacancy of a building applies under the two following situations[2]:

(a) When a building that is fit for occupation cannot be let at a reasonable rent despite efforts to do so.  The vacancy refund does not apply to buildings that are fit for occupation but are kept vacant in the hope of higher rentals or higher resale values.

(b) When a building that is unfit for occupation is undergoing repairs to render it fit for occupation.  Such repairs do not include upgrading work, extensions or additions to the building. The vacancy refund does not apply to buildings that are fit for occupation but vacated for renovation, retrofitting or other building works carried out for the purpose of upgrading or improving such buildings.

The vacancy refund does not apply to any rent-free fitting-out period given to a tenant prior to his occupation of a building.

Contradiction Removed
In Budget Speech 2013, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said that property tax was a tax on property ownership and should be levied irrespective of whether the property was vacant or occupied.  For consistency and equity in tax treatment, he would remove the current concession which provided tax refunds on vacant properties.

By removing this long standing concession, the Government will align its property tax principles and/or practice with its philosophy that property tax is a tax on wealth.

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Notes

1. INLAND REVENUE AUTHORITY OF SINGAPORE website (viewed on 3 Mar 2013).

2. INLAND REVENUE AUTHORITY OF SINGAPORE Claim for Refund of Property Tax on Unoccupied Buildings  24 Jan 1994, updated 31 Mar 2005.

2 comments:

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  2. Everyone have to pay tax after purchasing public property records, before paying tax you need to aware about all necessary basic information.

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