Indranee Rajah rejects call to assess owner-occupied homes by capital value, backs annual value system
Indranee Rajah has rejected a Workers’ Party proposal to assess owner-occupied homes using capital value instead of annual value. She said all residential properties must share a common valuation yardstick to ensure fairness, stability and predictability in property tax.
- WP MP Kenneth Tiong questioned property tax assessments for “asset-rich, cash-poor” owner-occupiers.
- Indranee Rajah said all homes must use the same annual value method for fairness.
- Government argues rental data is more stable and predictable than sales-based valuations.
Second Minister for Finance Indranee Rajah has rejected a proposal by Workers’ Party MP Kenneth Tiong to assess owner-occupied residential properties using capital value instead of annual value.
She said the same valuation basis must apply to all residential properties, whether owner-occupied, rented out or vacant, to ensure fairness and consistency.
The exchange took place on 26 February 2026 during the Committee of Supply 2026 debate for the Ministry of Finance.
Concerns over ‘asset-rich, cash-poor’ homeowners
Kenneth Tiong, MP for Aljunied GRC, raised concerns about how property tax is calculated for long-time owner-occupiers under the Annual Value (AV) system.
He described visiting a retiree who had lived for decades in a basic landed home within a neighbourhood that had since gentrified.
According to Tiong, the retiree’s neighbour had rebuilt his property into a multi-storey home with three units and multiple tenants, generating high rental yields.
Under the AV system, property tax is based on estimated rental value derived from comparable properties.
Tiong argued that this meant the retiree’s tax assessment was influenced by neighbouring rental transactions, even though he derived no rental income.
“A retiree who never retired and would never will is taxed as a landlord,” he said, highlighting the plight of those he described as “asset-rich, cash-poor”.
Proposal to use capital value
Tiong suggested that owner-occupied properties should instead be assessed using capital value derived from sales transactions rather than rental data.
He questioned why the Government had rejected this approach on grounds of fewer sales transactions and greater price volatility.
Tiong asked whether this reasoning was consistent with other valuation practices, including how the Chief Valuer prices state land for public housing.
He noted that the methodology references resale flat transactions, as confirmed by the Government in November 2025.
“Can the Minister explain this inconsistency?” he asked, urging the Government to consider capital value for owner-occupied property tax assessments.
Common yardstick for all residential properties
In response, Indranee Rajah said the proposal to use different valuation methods for different categories of homes “would not be an appropriate approach”.
“One should adopt the same evaluation basis for all residential properties, regardless of whether it is owner-occupied, rented out or vacant,” she said.
“That is so that there is a common yardstick to assess properties for property tax purposes.”
She stressed that the issue was not whether AV should apply only to rented properties and capital value to owner-occupied homes.
“The real question is whether one should use rental data for all residential properties, or sales data for all residential properties,” she said.
Rental data seen as more stable
Indranee argued that rental data provides a more stable and predictable basis for annual property tax assessments.
“There are more rental transactions than sale transactions, which provides a more accurate and stable picture of comparable properties,” she said.
She added that rents are generally less volatile than sale prices, as they are locked in by lease agreements and are less affected by market sentiment and the property cycle.
Addressing concerns about disparities between neighbours, she said adjustments are made during valuation.
“Just because a neighbour may have a better or more nicely developed home that commands a higher rental or AV, doesn’t mean that the neighbour who has a simpler home will have the same AV,” she said.
Distinction between valuation and tax rates
Indranee also emphasised the difference between valuation and property tax rates.
While all residential properties are valued using a common yardstick, different tax rates apply to owner-occupied and non-owner-occupied properties.
Property tax rates for owner-occupied homes are lower as a concession, and one-off rebates are provided from time to time to cushion the impact.
“This means that the retiree is also not taxed as if he is a landlord while the neighbourhood gentrifies,” she said.
She added that shifting to capital value would not necessarily reduce assessments, as both rents and sale prices tend to rise when neighbourhoods are revitalised.
Use of sales data in other contexts
On the use of sales data for state land, Indranee said such data is appropriate where there is an actual sale of land or property.
“This includes the sale of state land to HDB for public housing development,” she said.
“For AV, rental data is more appropriate for the reasons explained earlier.”
Indranee concluded by stressing the Government’s role as steward of national resources.
“We are stewards of our reserves, assets and resources as Singaporeans,” she said.
“It is our collective responsibility to make the best use of our resources for ourselves and for future generations, just as previous generations did for us.”
