$2.2m house faces sale over $7,000 unpaid tax

Not paying property taxes could lead to your property to be forcibly sold.

Fri, Sep 09, 2011
The New Paper

By Desmond Ng

Don't feel like paying your property taxes?

Well, do that repeatedly and you run the risk of the taxman foreclosing on your property - which means they will hold a forced sale of your home and take the amount owed to them.

In danger of being sold Click on thumbnail to view

That's what the owners of one pre-war terrace house on Devonshire Road in Somerset are facing now - just because of unpaid property tax of about $7,000.

The amount is the unpaid tax for two years.

In a rare move, the Inland Revenue Authority of Singapore (Iras), served a notice of sale on the owners of the 1,717 sq ft house by last month.

If the outstanding tax is not paid within three months of the Government Gazette being published, it will be auctioned off in November.

The freehold property is currently valued at between $2.2 million and $2.3 million, said property consultancy SLP International research head Nicholas Mak. This is based on prices of similar properties in the vicinity, he said.

One of the property owners, part-time chef Chen Zhen Nan, 53, said he can't wait for the property to be auctioned off.

He lives there with his wife and some friends.

Inherited property

Mr Chen inherited the property from his father,who died in 1986 at the age of 65.

He owns the place jointly with six older brothers and one sister, reported Lianhe Zaobao last week.

His dad used to be a temple medium and had more than 10 properties under his name,said Mr Chen.

He claimed that he has money problems and can't pay the property taxes.

He also said he had previously owed about $4,300 from 10 months of unpaid utility bills.

His electricity and water supply was cut off for a while until he borrowed money from friends to pay a portion of it.

He reckoned he still has $1,300 of unpaid utility bills.

Mr Chen told The New Paper that he had wanted to sell the property earlier to address his financial problems but he couldn't reach an agreement with his siblings.

He said:"We need help to pay our debts."

It is not the first time that the owners of this property have defaulted on paying their property tax.

They defaulted on their taxes from 2005 to 2009, and owed Iras about $15,000 then.

Iras had wanted to foreclose on the property but Mr Chen said his eldest brother helped to pay the property tax then, to prevent it from being auctioned off.

But that brother died this year.

Mr Chen also claimed that a developer wanted the whole stretch of houses but couldn't agree on the price.

He claimed the developer's price for their unit was $9.5 million.

When contacted, Iras said it auctions properties only under exceptional circumstances.

Said an Iras spokesman: "Before we auction a property, we would have issued reminders, notices to pay, made phone calls and appointed banks as agents to try to recover the taxes due."

Auctioning of a property is the last resort after all attempts to recover outstanding property taxes fail.

Iras said it has conducted three auctions since 2009.

On this property, Iras said it has served the various reminders and notices, including the latest notice of sale, to the address of the property.

Said an Iras spokesman:"We have also communicated with the occupant of the property, one of the children of the deceased owner, about the outstanding property tax.

"No one has come forward to pay the outstanding property tax."

Out of the outstanding property tax of $7,000, late payment penalty constitutes about $330.

Iras said that the valuation of the property is done by an independent party.

"If the tax is not paid by 23 Nov 2011, the day the notice of sale expires, we will proceed to have a valuation done," said Iras.

Mr Mak said that it's rare that Iras has to go to the extent of foreclosing on properties because most people will try to pay the tax.

He said: "It's (property tax) a smaller amount of money than bank mortgages."

It's more common to hear of banks foreclosing on properties because of outstanding mortgages, he said.

In this case, Iras will sell the property (subjected to a reserve price) and it will take the owed amount, minus expenses involved in selling the property such as the property agent's commission.

The rest of the money will be returned to the property's owners.

This article was first published in The New Paper.