How Property Tax is Computed

You can learn more in this article about how to compute property tax and provisional property tax and apply for paying less provisional tax.

How Property Tax is Computed

Property tax is computed at the standard rate on the net assessable value of the property for the relevant year of assessment. A year of assessment runs from 1 April to 31 March of the following year.

The net assessable value is computed as follows: 

[A] Rental Income
[B]   Less: Irrecoverable Rent
[C]  (A-B)
[D]   Less: Rates paid by owner(s)
[E]  (C-D)
[F]   Less: Statutory allowance for repairs and outgoings (E x 20%)
  Net Assessable Value (E-F)

The following links provide you with more information on computing property tax.

Tax rates of property taxMore information about rental incomeMore information about irrecoverable rentMore information about deductions against rental incomeMore information about statutory allowance for repairs & outgoings

How Much Property Tax Should be Paid

The following examples show how property tax are computed:

Example 1: How to compute the net assessable value (NAV) and the amount of tax

For the year of assessment 2016/17, rent was $10,000 per month and the tenant paid rates.

Assessment for 2016/17 (Final) and 2017/18 (Provisional)

  $
Assessable Value (AV)(rental for 12 months) 120,000
Less: 20% allowance for repairs and outgoings   24,000
NAV 96,000

 

  $
Property tax for 2015/16 @15% 14,400
Add: Provisional property tax for 2017/18 14,400
(tax at standard rate of 15% on the NAV for 2016/17)  
Total amount of tax payable 28,800

 

  • Due date for payment:
    You will find a due date on the notice of assessment and you must make payment on or before the due date, unless on objection against the assessment or on the lodgment of a holdover claim, you have been notified by the Inland Revenue Department that you may pay a lesser amount of tax by the due date.
  • Provisional property tax will be payable in two instalments:
    On the notice of assessment, two due dates for tax payment can be found. Normally the first payment date will fall in November of the same year of the issue date and the second payment date will fall in April of the next year. This is because insofar as provisional tax is concerned, you will have received 7 months’ rent (i.e., rent for April to October) by the end of October and the full year’s rent by the end of March next year.

 

Example 2: Commence letting during the year

If the property was let on 1 July 2016 for $30,000 per month and rates paid by the owner(s) were $12,000.

Property Tax for 2016/17 (Final)

  $
AV (rental for 9 months)  270,000
Less: rates paid by owner    12,000
   258,000
Less: 20% allowance for repairs and outgoings    51,600
NAV  206,400
Property tax for 2016/17 @15%  30,960

 

  • Note: As the letting was commenced during the year, provisional property tax for 2017/18 will be based on the NAV for 2016/17, but grossed up to 12 months, as follows:
      $
    Estimated NAV for 12 months $(206,400 x 12/9) 275,200
    Provisional property tax for 2017/18 @15%  41,280

 

  • Notice of assessment for property tax
    The property owner(s) will receive one single notice of assessment with the following details:
      $
    Property tax for 2016/17  30,960
    Provisional property tax for 2017/18 41,280
    Total amount of tax payable 72,240

 

  • Calculation of the tax payable on the two payment dates:
    First Instalment
    2016/17 property tax + 7/12 of 2017/18 provisional tax  
    $(30,960 + 41,280 x 7/12)  $55,040

    Second Instalment
      $
    Balance of 2017/18 provisional tax  
    $(41,280 x 5/12) 17,200
     Total tax payable 72,240

 

How to Apply for Holdover of Provisional Tax

If one of the following conditions is applicable, you have to apply in writing not later than 28 days before the due date for payment of tax, or 14 days after the date of the notice for payment of provisional property tax, whichever is later.

  • The assessable value for the provisional tax year was less than or likely to be less than
    90% of the assessable value for the preceding year 
    or
    90% of the estimated assessable value in respect of which you are liable to pay provisional tax.

    In Example 1 above, the AV for 2016/17 is $120,000. If you wish to apply for holdover of part of the provisional tax, the estimated AV for 2017/18 must be less than $108,000.
  • Your objection against the amount of NAV for the year of assessment 2016/17 is still in progress and the whole or part of the 2016/17 property tax has been stoodover.
  • You have sold the property concerned in 2017/18 and your rental income is reduced during the provisional tax year.
  • The amount of tax will be reduced because you have made an election for personal assessment.
Form IR1121 for holdover of provisional taxMore on application for holding over of provisional tax
Last revision date: April 2017