Annual Value, or AV, is a key determinant and metric used to assess your eligibility for many government schemes, such as the GST Voucher and the recent Self-Employed Person Income Relief Scheme (SIRS). It is also used to assess the amount of property tax you must pay annually.
But what exactly is Annual Value? Let’s understand this important metric.
What is the Annual Value of a Property?
According to the Inland Revenue Authority of Singapore’s (IRAS) definition, the annual value of a property is the estimated gross annual rent of the property if it were to be rented out, excluding furniture, furnishings and maintenance fees.
The factors considered in determining the Annual Value of properties are:
- rentals of similar or comparable properties in the vicinity;
- size of the property;
- location of the property;
- condition of the property; and
- other relevant physical attributes.
It is not based on the actual rental income received. As such, even if you were to receive a much higher rent as compared to other similar properties, it does not automatically the Annual Value of your property higher.
Determining Annual Value of a Property
You may have rented out your 140sqm, 3-Bedroom (3BR) property at 20 May Road for a monthly gross rent of S$5,000. To determine the Annual Value of of this property, IRAS looks at the market rentals of other similar properties (not yours) located at 20 May Road (or the nearby vicinity) with a comparable floor area. The gross rent may vary from say, S$4,000 to S$5,500.
IRAS then deducts an allowance for furniture, furnishings and maintenance fees. The Annual Value may then be somewhere around S$36,000 ($3,000 per month).
Determining Annual Value of Land and Development Sites
The AV is determined at 5% of the estimated freehold market value and applies to both vacant land and land under construction.
Determining Annual Value of Specialised Properties
Such properties include refineries, petrochemical and power plants.
The statutory formula may be used or the Profit’s Method and Contractor’s Test.
How does Annual Value of a Property affect Property Tax?
Annual property tax is calculated by multiplying the Annual Value of the property with the relevant property tax rates. This is also affected by whether the property is owner-occupied or not, and the type of property.
Owner-occupier Tax Rates for Residential Properties
If the Annual Value of your condominium property is $30,000, you would pay nothing on your first $8,000. For the remaining $28,000, you will incur a property tax of 4%. This works out to $1,120. Hence, the total property tax payable is $1,120.
Non-owner-occupier Tax Rates for Residential Properties
This does not apply to several properties such as chalets, child care centres, hotels etc. Such properties will instead be taxed at an existing 10%.
Commercial and Industrial Properties (Non-Residential)
Such buildings are taxed at 10% of their Annual Value.
How to Check the Annual Value of Your Property?
You can check the Annual Value of properties you own at no cost through IRAS portal. To find out the Annual Value of any property (which you do not own) you can do so through IRAS online service at a fee of S$2.50 (inclusive of GST).
Impact of Annual Value on Government Schemes
Now that you know the Annual Value of your property, you can find out your eligibility for various government schemes.
GST Voucher (Cash)
All Singapore citizens aged 21 or above are eligible to receive cash GST voucher. However, this is determined by your assessable income as well as the Annual Value of your home (as indicated on your NRIC). You must also not own more than one property.
The eligibility criteria for 2020 GST Voucher (Cash) are as follows:
More information on the GST voucher scheme can be found here.
Self-Employed Person Income Relief Scheme (SIRS)
Amongst other criteria, the government has recently raised the Annual Value criterion from $13,000 to $21,000. This means that the scheme is now open to self-employed people who live in a property with an annual value of no more than $21,000, assuming you meet the other criteria. About 100,000 self-employed people are automatically eligible. You can check online if you are automatically eligible.
If you require any form of assistance on the Annual Value of your property or your property taxes, you may contact us and we will be more than willing to assist you.