Property in Singapore: Changes to property tax act

Friday, September 24, 2010

Changes to property tax act

Published September 17, 2010
YESTERDAY IN PARLIAMENT
No need to inform IRAS of improvements to property By FELDA CHAY PROPERTY owners will no longer need to inform the Inland Revenue Authority of Singapore (IRAS) when they rebuild, enlarge, alter or conduct improvement works on their properties. In one of three changes Parliament passed on the property tax act yesterday, IRAS will now obtain the necessary information - essential to re-assessing property tax - directly from other government agencies that have the information. Two other amendments to the property tax act will see the fine tuning of the definition of 'structural networks', and reduction of the time limit for the recovery of property tax to five years from the current six years. Lim Hwee Hua, Minister in the Prime Minister's Office and Second Minister for Finance and Transport, said that shortening the time limit to recover outstanding property tax 'is in alignment with the five year time-bar period for tax recovery under other Tax Acts', such as the income tax and GST tax acts. The change is set to kick in from January 2012. On fine-tuning the definition of 'structural networks', Mrs Lim said that the definition should be made clearer 'for the avoidance of doubt, that even a single pipeline may be regarded as a structural network. Further, it will be made clear that property tax can be levied on the installed parts of a network that is currently in use or intended to be in use.' For example, a network of pipelines that has been installed but has yet to be put to active use is liable to property tax, she added. Last week, IRAS said that its $2 billion property tax collection for FY 2009-2010 was 31 per cent lower than the FY 2008-2009 collection.

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GOOD CLASS BUNGALOWS

Buying the ultimate home

With only about 2,400 units of good class bungalows in the market, almost any GCB would be a rare find.

By Arthur SimPublished: August 13 2009,The Business Times
THEY are wealthy and successful people who can probably afford to buy any home they want, but many of them are being drawn towards good class bungalows (GCBs). There are only 39 designated GCB areas in Singapore and Binjai Park is one of them.

However, these areas are not all equal. Some GCB locations are more prestigious than others. For instance, the current asking price for GCB land in the Nassim area is between $1,500-$2,000 per square foot (psf) whereas in Chestnut Drive, GCBs have been known to have transacted at around $550 psf.

There are also pros and cons to buying either an old bungalow or a newly built one. 'Some old GCBs have unique architectural features and come with a rich heritage. Buyers, however, have to be prepared to set aside some money to refurbish and upgrade the building and fit it out with modern conveniences,'

New buildings, he says, can be tailored to specific tastes but also be expensive. But what usually pushes up prices is the location. A martial arts movie star who picked up a GCB at Binjai Park for $19.8 million at around $871.36 psf earlier this year appears to have gotten a good buy. It was reported that the seller of the house had incurred a loss of $1.2 million on the deal, having bought the property in early 2007 for $21 million, or $924 psf. The selling price for a newly built GCB will generally be higher than that of an old GCB. 'The choice normally depends on whether the buyer is price sensitive,'. A new house might take as long as two years to build although it is more likely to be built to the owner's precise specifications.

If one is looking for exclusivity, the most expensive GCBs are generally in the Nassim and Lady Hill areas. This is followed by those in the Tanglin vicinity such as the Rochalie, Bishopsgate and Chatsworth areas.On the prices, GCBs in the Tanglin vicinity range from $1,200-$1,400 psf for the top of this category.

'Other popular GCB areas are in the Swettenham, Pierce, Dalvey, Cluny Park areas where prices can range from $1,100-$1,300 psf', '1,000 psf is the standard price for an average GCB. Prices have been moving up over the last six months. Permanent residents are permitted to buy landed property, but only with permission from the government. Foreigners cannot easily buy a GCB or any other landed home here as the government restricts foreign ownership of residential property. However, foreigners who take up Singapore citizenship may buy landed property. The exception to the restrictions is the gated residential enclave of Sentosa Cove, where ownership rules were eased to allow foreigners who are not permanent residents to buy landed homes or land plots, though permission is still needed.

Apart from some restrictions on ownership, one of the common misconceptions when buying a GCB is that some buyers unknowingly pay a premium for a home that actually falls outside the designated GCB areas. 'Some buyers think that as long as a bungalow has a land area of 15,070 sq ft, it is considered a GCB, not knowing there are only 39 designated areas,' he added. Before buying any home, it is also useful to do some checks. For instance, it is useful for a surveyor to be called in to assess and ascertain the site boundary for issues such as encroachment. A structural surveyor or engineer can also be engaged to assess the structural integrity of a house, especially if it is an old or conserved bungalow. It is also important to check with the relevant authorities about possible drainage and road reserves as this could affect the the boundary setbacks. Finally, the terrain, shape of the site and frontage are other physical characteristics that are important, especially if one is going to build a new house. But with only about 2,400 units of GCBs in the market, almost any GCB would be a rare find. 'The majority are owned by the who's who - and are seldom placed for sale in the market. On the contrary, there's an increasing pool of buyers made up of high net worth individuals, GCB collectors as well as permanent residents who are looking to buy GCBs for their own use,' he adds.

GCB buyers are a discerning group of investors who also have a different view on what makes a good investment. 'Yields are not part of the investment criteria - which is typically less than 2 per cent,' said Mr Han. Instead most see GCBs as a good long-term asset class of investment, 'especially in land-scarce Singapore where land value appreciates over time'. And Mr Han believes that the outlook for GCBs is also good.