We refer to the letter, "Don't penalise genuine HDB home owners" (The New Paper, 4 Dec), by Chilson Yuen.

He commented that there should be a distinction between speculators and home owners, and that those who do not sublet their flats should be exempted from the property tax hike.

In other words, the writer is suggesting that property tax should be raised only for property owners who rent out their properties and not for those who live in their properties.

Property tax, which is imposed in most countries, is a tax on property ownership.

The basis of assessing the property tax is the market value of the property.

In our case, the market rent is used as a basis in determining its assessable value.

The assessable value or "annual value" is the same regardless of whether the property is owner-occupied or rented out.

The general property tax rate is 10 per cent. However, to encourage home ownership, owner-occupiers of residential properties currently pay a concessionary property tax rate of 4 per cent instead.

In addition, all HDB owner-occupiers will get to enjoy a new property tax rebate in 2010.

This rebate is on top of the property tax rebates of $25-$150 for owner-occupied properties with annual values below $10,000.

We would like to thank the writer for the opportunity to clarify this.

Yvonne Yim
Principal Corporate Communications Officer
Inland Revenue Authority Of Singapore