Can senior citizen afford to maintain his house in high AV

Private home rentals have moderated. The data of the Urban Redevelopment Authority show that private home rentals fell by 2,1% from quarter to quarter in Q4-2023.

Still, landlords of residential properties in this country have enjoyed good times. Private home rents rose 8.7% by 2023, following a jump from 29.7% to 2022.

Residential landlords are not feeling as happy about the new property tax.

The rate of residential non-owner occupied taxation increased from 10% to 20% of annual value (AV) in 2020 to between 12 and 36% of AV by 2024.

Property taxes are progressive and higher rates apply to homes with higher values.

The estimated annual rent of a property, excluding furniture and furnishings, is called the AV.

The Business Times received a report from the Ministry of Finance last November stating that up to 80 per cent of homes will have an increase of between 15 and 25 percent in 2024. In some cases, this rise could be as high as 25 per cent.

In general, property taxes are higher when the value added to a home increases.

Landlords who have outstanding housing loan payments should take note of being liable for the monthly payment, property tax, and maintenance costs when their homes are vacant and non-income producing.

The property tax on a vacant home and the costs of maintenance will be due by a retired landlord, even if there is no outstanding loan.

Owner-occupiers of residential properties are treated more favourably in terms of property taxes.

Owner-occupier home tax rates are lower compared to non-owner occupant rates. Homeowners will receive an annual property tax exemption in 2024. Private home-owners can receive a 15 percent rebate, with a cap of S$1,000.

Budget 2024 was a good budget for many home-owners. From January 1, 2025 the AV bands of residential property tax rates for owner-occupiers are going to be raised. As a result, the property tax for many homeowners will be reduced.

But even those who own more expensive homes can feel the pain.

Owner-occupier property tax rates are increasing. They went from 0-16% of the AV (annual value) in 2022 to 0-32% by 2024. For more expensive houses, higher tax rates apply.

Owner-occupier in a condominium with a rising AV. The AV of the unit rose from S$70,000 by 2022 to S$93300 by 2024. In 2022, the annual property tax paid by this homeowner was S$2,780.

Due to the new AV bands, the homeowner will pay a lower annual property tax of S$7.280 in 2025 if their AV remains unchanged.

In 2025, however, the tax on homeownership will still be higher by 162 percent.

People who have been in the workforce for many years will find it a pleasure to be debt free after paying back a multi-year mortgage. The peace of retirement that comes with living in a paid-up house is greater. But higher property taxes can prevent retirees to be able live in a home that they own.

Imagine a married couple who are both 55 years old. This couple decides to save the Enhanced Retired Sum of S$308,700 in their CPF Accounts.

The couple will receive a combined fixed monthly payout of S$4,730 when they turn 65.

In 2025 if the couple owns an owner-occupied home with an AV (annual value) of S$70,000 they will pay S$3,720 in property taxes, without any rebates. This is about S$310 each month.

In 30 years, if property taxes rise by 4% annually, for instance, because of an increase in the AV (value of the house), the property tax is likely to be S$1,005 each month. This represents over 21% of the monthly CPF life payout.

In their later years, could higher property taxes make it unaffordable for retired home owners to continue paying them?

The government considers property tax to be a primary source of income tax. Property tax works because it is very difficult to avoid. Taxing the wealth of those with higher means is important in combating inequality.

The future residential property tax increases may have a negative impact on home owners. Over time, private home owner-occupiers who are retired may find it difficult to pay their property tax.

You can certainly trade in your private unit if you are a retiree with a private house.

The process could result in money being freed up. HDB flat owners are likely to pay lower taxes and other expenses related to ownership than those who own private homes.

One incurs costs when moving from a home owned by the owner to another. It is important to note that the stress associated with moving when you have to downgrade your home because of financial considerations, even if you are in your 70s.

Older people may have trouble adjusting to new environments. An elderly person may be thrown out of their usual routine by a new home, resulting in negative mental effects.

It is essential to plan for retirement if one wants to stay in a home that they own.

Book a viewing to Bagnall Haus Showflat now.

A move from your private home to HDB can be easy. HDB offers a wide range of spacious flats that are well located. HDB towns offer good transport connections and comprehensive amenities like healthcare and recreational facilities.

When you can handle the stress and strain of moving, as well as embrace the possibilities that come with a new environment, it may be the best time to make the switch from a HDB unit to a privately owned home.

In contrast, if you plan to age in your own home, working longer and earning more money could help protect you from increasing costs. This includes higher taxes on property.

As a result, employers are more likely to hire older employees and to tailor their job to suit them.


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