What is a Mill levy?
A mill levy is a property tax assessed on real estate. It’s calculated by taking the total property tax revenue needed and dividing it by the taxable value of all properties. This determines the tax rate per $1,000 of a property’s assessed value, also known as the mill rate.
For example, say a county needs $10 million in property taxes. The total assessed value of all properties is $1 billion. Dividing $10 million by $1 billion equals 0.01. This means the mill levy would be 10 mills, or $10 per $1,000 of assessed value.
A high mill levy means you’ll pay more in property taxes, while a lower mill levy results in lower taxes.
Are mill levies used in Singapore property tax?
In Singapore’s property tax framework, mill levies are not explicitly utilised. Instead, property tax rates are computed based on the Annual Value (AV) of the property and the prevailing property tax rate.
The AV is established through rental transactions of similar properties, ensuring consistent property tax assessment for owners. Subsequently, the property tax due is determined by multiplying the AV by the specific property tax rate relevant to the property’s classification, whether residential or non-residential.
Hence, although mill levies are not directly incorporated into Singapore’s property tax structure, the calculation methodology revolves around the property’s AV and the corresponding tax rates based on its classification.
Read more: What is the Annual Value of a property and how do I check mine?
How do Mill levies impact homebuyers?
For prospective homebuyers, the mill levy directly affects affordability. Property taxes are bundled into your monthly mortgage payment along with principal, interest, and insurance. The higher the mill levy, the larger your total monthly payment.
Here’s an example:
House A is in a district with a mill levy of 40 mills. The home’s assessed value is $300,000, so the annual property tax would be:
40 mills x ($300,000 / $1,000) = $12,000
House B has the same assessed value, but the mill levy is just 20 mills. The annual property tax would be:
20 mills x ($300,000 / $1,000) = $6,000
With House A, your monthly mortgage payment would need to cover an extra $500 per month in taxes compared to House B. That adds up quickly over the life of a 30-year loan.
How to calculate Mill levies?
When viewing listings and attending open houses, ask the real estate agent for the property’s mill levy rate. If it’s not readily available, you can look it up on your county assessor’s website by searching the property address.
It’s also smart to calculate the actual dollar amount by multiplying the mill levy and assessed value. This gives you the real financial impact rather than just looking at the rate alone.
In addition, compare mill levies across neighbourhoods you’re considering. There can be significant variance even within a few miles. This will help you determine the most affordable areas.
