So… There’s been a loooot of talk about Annual Value going around in Singapore these days – mostly because of its relevance to the government’s income relief schemes (i.e. “Am I going to get money?!?!?!?”).
And for some of us, it might be the first time we’re hearing of such a term.
We’ve put together a quick guide to calculating Annual Value, and basically all things to do with Annual Value:
What is Annual Value (AV)?
The Annual Value (AV) of your home is the estimated gross annual rent you’d be collecting if you were to rent it out. It’s determined based on the size, location and condition of your property, as well as the estimated market rental rates of similar properties.
Here’s the average AV of the different types of properties in Singapore:
You can check the AV of your property using the IRAS myTax portal.
Or if you want to stalk someone else’s property AV, you can also check the AV of any property via IRAS. Each enquiry will cost $2.50, but who ask you so nosy?
Also, you might be wondering… How can a 3-room HDB flat, for instance, only be worth less than $8,000 in rent for an entire year?! That’s because AV also provides a reasonable allowance for furniture and maintenance fees – the actual rent that landlords collect is often more than the property’s given AV.
How is Annual Value relevant to you?
Self-Employed Person (SEP) Income Relief Scheme (SIRS)
Of course, the biggest talking point right now: The Self-Employed Person (SEP) Income Relief Scheme (SIRS), aimed to help eligible SEPs in this period of economic (and existential, tbh) uncertainty.
Under this scheme, eligible SEPs will receive $1,000 cash every month for 9 months.
BUT!!!! Only if you meet certain criteria, one being that you have be living in a property with an Annual Value of no more than $13,000.
According to the Ministry of Manpower (MOM) and Central Provident Fund Board (CPFB), the $13,000 threshold should cover all HDB flats, as well as some smaller private residences. Again, best to check via IRAS myTax.
Other government support schemes
Many other government support schemes such as the Workfare Income Supplement (WIS) and the GST Voucher scheme also require that your AV is below a certain amount.
Basically, the AV of your property acts as an indicator of your financial health – in general, Singaporeans staying in larger properties with higher AVs tend to have greater access to household wealth, and are hence less covered by government support schemes.
Property tax
If you’re the one paying the property tax for your home, you’re probably familiar with this whole AV thing, since your property tax is determined based on your AV.
Your annual property tax, payable to IRAS, is calculated by multiplying the AV of your property to your tax rate, which depends on whether you’re living in your property or not.
If you’re an owner-occupier (i.e. living in your property), your tax rates are:
For instance, if the AV of your property is $20,000, the property tax payable would be:
0% on first $8,000 + 4% on next $12,000 = $480
Note that if you’re a live-in landlord (for instance, if you’re just renting out your spare room), you’re still considered an owner-occupier.
If you’re a non-owner-occupier (i.e. you don’t live in the property you own), your tax rate for that property is higher. The assumption here is that if you’re not living in the property, you’re renting it out for income, hence the heftier tax rate:
But if you can’t be bothered to do the math (or, you know, just can’t do the math), IRAS also has a handy property tax calculator.
Deciding whether to rent out your property
Since the AV is based on the potential rental income after all. But as we mentioned, the AV of your property is likely to be lower than the actual rental revenue you would get.
We’d say it’s best to check for market rental rates to get a better idea of how much more you can really be earning through renting out. Totally acceptable to unleash your inner stalker at this point. For one, you’ll find it useful to browse through Carousell’s rental listings to find out how others are pricing their rentals.
Or, check the market rental rates of HDB flats using HDB’s e-service, or that of condos and private properties using URA’s e-service. Super useful – you can track rental rates down to specific blocks of HDB flats or particular condo projects.
Note that these rental rates might have been negotiated down from the original asking price, so if you want to leave room for negotiation, you might want to price your rental at $50 or $100 more.
Knowing the Annual Value (AV) of your property
And that’s about it, the idea behind Annual Value is quite simple.
Although it’s a reflection of the property you’re living in, it’s also relevant to other areas of your life.
We hope you now find property to be of increasing importance to you, because we’re about to segue into directing you to more property news in Singapore. Check it out ok?
