Property-Related Taxes in Singapore
Singapore has established a very competitive and fair property-related tax system to regulate the property market. When you purchase new launch development, you are subject to pay property-related taxes includes Buyer’s Stamp Duty and/or Additional Buyer’s Stamp Duty (ABSD) which is subject to your nationality and/or Numbers of residential property you own in Singapore. After you become the proud homeowners, you are subject to pay Property Tax annually, or Seller’s Stamp Duty when you plan to sell your home within 3 years from the date on which you exercise the Sales &Purchase Agreement.
- Stamp Duty: it is a document-related tax. Almost all property transactions are subject to Stamp Duty.
- Additional Buyer’s Stamp Duty(ABSD): ABSD is a Stamp Duty on the top of the existing Stamp Duty for special group of buyers when purchase residential property.
- Seller’s Stamp Duty(SSD): SSD is a Stamp Duty imposed on sellers who sell or dispose their property within a certain period of time.
- Property Tax: it is a wealth tax paid yearly by a property owner and is applied irrespective of whether lived in, vacant or rented out.
Stamp Duty
Stamp Duty is a document-related tax. Almost all property transactions are subject to Stamp Duty. There are also Additional Buyer’s Stamp Duty and Seller’s Stamp Duty applicable in some cases of the property transactions.
What kind of document is subject to Stamp Duty in real estate?
Here are some good examples:
- When you sign Lease or Tenancy Agreements to rent a property, the person who leases or rents the property is responsible for paying Stamp Duty.
- When you accept Option to Purchase or sign Sale & Purchase Agreements to buy or sell your property. The buyer is responsible for paying Buyer’s Stamp Duty. Where Seller’s Stamp Duty is applicable, the seller is responsible for paying Seller’s Stamp Duty.
- When you sign and obtain a loan from banks for your property purchase, Stamp Duty is payable on the loan amount by mortgagor.
- When the property is transferred by Transfer by Way of Gift, is liable to Stamp Duty.
- You are required to pay stamp duty on documents Where you exchange or agree to exchange your properties.
- You are required to pay stamp duty on documents where co-owners of a property divide or agree to divide the property into individual ownership.
- The Deed of Settlement is subject to stamp duty if properties and shares are involved.
- Stamp Duty is payable on the document where the distribution of property to the beneficiary in a deceased’s estate not in accordance to a Will, Intestate Succession Act and Muslim Law of Inheritance.
- When a company goes into voluntary liquidation and its properties are distributed to its shareholders, the document relating to the transfer is liable to Stamp Duty.
- When a company distributes dividends in the form of a property to its shareholders, the document relating to the transfer is liable to Stamp Duty.
Why should you pay Stamp Duty?
According to the Stamp Duties Act, it’s an offense to use a document without paying Stamp Duty. A penalty of up to 4 times will be imposed if authority detects later.
A document where Stamp Duty is paid can be admitted as evidence in the court in cases of disagreements.
When should you pay Stamp Duty?
Stamp Duty needs to be paid once the document is signed and dated either within 14 days after the date of the document if the document is signed in Singapore or within 30 days after the date of its receipt in Singapore if the document is signed overseas.
How to Calculate Stamp Duty payable?
When the stamp duty is calculated, different formulas are used based on what kind of document is signed for the transaction.
Stamp duty for lease tenancy agreements
The lease duty is calculated on the average annual rent and progressive rate based on the lease terms.
Where annual rent does not exceed $1,000, Stamp Duty is exempted.
Where annual rent exceeds $1,000, Stamp Duty is based on the contractual rent or market rent, whichever is higher.
- Within 1 year of the lease, $1 is payable for every $250 or part thereof of the average annual rent
- More than 1 year and up to 3 years, $2 is payable for every $250 or part thereof of the average annual rent
- More than 3 years or for an indefinite term, $4 is payable for every $250 or part thereof of the average annual rent
Stamp duty for conveyance
This includes sale and purchase of property, transfer by way of gift, exchange, partition, settlement relating to a property, and distribution of property
Stamp Duty is calculated based on the purchase price or market value, whichever is higher, using a progressive rate.
- For the first $180,000, $1 is payable for every $100, that is $1,800
- For the second $180,000, $2 is payable for every $100, that is %3,600
- For the rest amount, $3 is payable for every $100
- For the rest amount above $1,000,000, $4 is payable for every $100
The stamp duty payable is the total amount of the above 3 terms.
Additional Buyer’s Stamp Duty(ASBD)
Additional Buyer’s Stamp Duty(ASBD) has been imposed on certain groups of people who buy or acquire residential properties from 8 Dec 2011. The revised ABSD rates applicable to purchases or acquisitions of residential properties has been implemented after 12 Jan 2013. ASBD is applied to regulate the rapid increase in residential property prices in Singapore.
Who are the affected buyers or transferees required to pay ABSD on top of the existing Buyer’s Stamp Duty?
The following buyers or transferees will be affected from 12 Jan 2013 to 5 July, 2018:
- Foreigners and entities would have to pay ABSD of 15% on the purchase or acquisition of any residential property.
- Singapore PR would have to pay ABSD of 5% on the purchase or acquisition of their first residential property.
- Singapore PR who already own 1 or more residential properties would have to pay ABSD of 10% on the purchase or acquisition of another residential property.
- Singapore Citizen who already own one residential property would have to pay ABSD of 7% on the purchase or acquisition of the second residential property.
- Singapore Citizen who already own two or more residential properties would have to pay ABSD of 10% on the purchase or acquisition of another residential property.
The following buyers or transferees will be affected from 6 July, 2018 onward
- Foreigners and entities would have to pay ABSD of 20% on the purchase or acquisition of any residential property.
- Singapore PRs would have to pay ABSD of 5% on the purchase or acquisition of their first residential property.
- Singapore PRs who already own 1 or more residential properties would have to pay ABSD of 15% on the purchase or acquisition of another residential property.
- Singapore Citizens who already own one residential property would have to pay ABSD of 12% on the purchase or acquisition of the second residential property.
- Singapore citizens who already own two or more residential properties would have to pay ABSD of 15% on the purchase or acquisition of another residential property.
- Non-individual or entity purchasers are requested to pay ABSD of 25% on the purchase of the residential property.
The ABSD is payable by affected buyers at fixed rates on the actual price paid or market value of the property whichever is the higher.
What kind of residential properties are counted subject to ASBD?
- Build units used for the residential purpose: condominiums, apartments
- Vacant Land or entire building on land with Master Plan zonings used for purely residential, mixed with residential, institutional, or white purposes: landed houses, etc.
The property is to be included in the count of properties owned by a person if there is already a Contract or Agreement to purchase the property.
How to count the numbers of residential properties owned for ASBD?
Here are the possible situations
- Full count for partial ownership and joint ownership: as long as a person owns any share of interest in a property, that property will be included in the count of properties owned by him
- Manner of property acquisition / transfer: regardless the manner you acquire the property, you are subject to ABSD depending on the profile of the purchaser, transferee, beneficiary and the intended transferee.
- Purchase of multiple properties in one transaction: each property under a single contract will be counted as a separate property.
- Transfer of partial interest amongst co-owners: where the owner already owns a partial interest in a property, the ABSD rate applicable for the acquisition of additional interest in the same property will depend on the number of properties he already owns at the time of the acquisition.
Properties gazetted for compulsory acquisition: all residential properties gazetted for compulsory acquisition will be excluded from the count of properties.
Is there any situation where ASBD remission or refund applies?
Yes, there are certain scenarios under which ASBD can be remitted or refunded for buyers:
- Purchase of HDB Flats and EC Units
- Purchase by Married Couples
- Foreigners under Free Trade Agreements (FTAs)
- Development Sites with 5 or More Residential Units
- Development Sites with 4 or Less Residential Units
- Purchase of Land by Property Developer for Development by a Related Entity
- The amalgamation of Land for Development by Property Developers
- Treatment for Purchase of Properties During the Transitional Period
Remission for such purchases of HDB Flats and EC Units will be granted automatically upon approval of purchase by HDB. All else applications must be submitted, together with the relevant supporting documents to Commissioner of Stamp Duties for consideration.
Seller’s Stamp Duty(SSD)
A Seller’s Stamp Duty(SSD) has been imposed by Singapore Government on sellers who buy (or acquire) private residential properties on or after 20 February 2010 and sell (or disposed of) them within one year of acquisition. SSD is a cooling measure to discourage buyers or sellers to frequently purchase and sell the property for short-term profits.
Properties acquired before 20 Feb 2010 will not be subject to SSD.
All HDB and EC flats are not affected since HDB has other restrictions on them, for example, 5 Minimum Occupation Period imposed on all HDB and EC owners.
Since then, there has already 3 round of revisions on SSD, including the implementation of SSD on the industrial property from 14 January 2013.
1. SSD revision after 29 Aug 2010: SSD will be payable on residential properties that are acquired (or purchased) on or after 30 Aug 2010 and disposed of (or sold) within 3 years of acquisition. The amount of SSD for the holding period of 1 year is computed based on the same rates as the buyer’s stamp duty, but will be reduced to 2/3 and 1/3 of the amount of buyer’s stamp duty for holding period of 2 years and 3 years respectively.
2. SSD revision after 13 January 2011, the Government announced the extension of the holding period for imposition of SSD on residential properties from 3 years to 4 years based on new rates. The new SSD rates will be imposed on residential properties which are acquired (or purchased) on or after 14 January 2011 and disposed of (or sold) within 4 years of acquisition, as follows:
- Holding period of 1 year: 16% of price or market value, whichever is higher
- Holding period of 2 years: 12% of price or market value, whichever is higher
- Holding period of 3 years: 8% of price or market value, whichever is higher
- Holding period of 4 years: 4% of price or market value, whichever is higher
3. SSD revision after 11 March 2017, the Government will therefore revise the SSD as follows on residential property transactions:
- Impose SSD on holding periods of up to 3 years, down from the current 4 years; and
- Lower the SSD rate by four percentage points for each tier.
- The new SSD rates will range from 4% (for properties sold in the third year) to 12% (for those sold within the first year).
What kind of industrial properties will be affected by industrial SSD?
The following are the types of industrial properties within the scope of industrial SSD:
- Building units (including those under construction) with permitted industrial uses
- Vacant land or entire building on land with Master Plan zonings used for industrial purpose
When is the date of acquisition or disposal considered for SSD application?
- Date of exercise of Option to Purchase (OTP) or Contract; or
- Date of Sale & Purchase Agreement (where OTP is not applicable); or
- Date of Transfer (where (i) and (ii) above are not available nor applicable).
Property Tax
The property tax is a wealth tax paid yearly by a property owner and is applied irrespective of whether lived in, vacant or rented out. The amount of tax payable every year is computed based on the annual value of the property. Singapore uses a progressive tax rate system based on both annual value and status of property utilization. Those who live in the more expensive homes will pay more property taxes than others.
How is property tax calculated?
Property tax is calculated based on annual value with a progressive rate system According to The Property Act, the annual value for house and building units is the estimated annual rent of your property refer to the rents of similar or comparable properties if it were to be rented out, excluding the furniture, furnishings and maintenance fees. The annual value for land and development site is determined at 5% of its estimated freehold market value.
Currently, property tax is payable at 10% of the Annual Value (AV) regardless of whether the property is let out, vacant or occupied. Owner occupiers of residential properties may pay concessionary owner-occupier tax rates based on the annual values of your building as follows:
- The first $6,000 is exempted from tax
- The next $59,00 is subject to a 4% tax rate
- The amount exceeding $65,000 is subject to a 6% tax rate
Total amount of property tax payable is the sum of the above three items.
According to Budget 2013, the Government announced the introduction of progressive tax rates for all residential properties from 1 Jan 2014 and 1 Jan 2015.
- New Progressive Tax Rates for non-owner-occupied residential properties
|
Progressive Tax Rates |
||
| Annual Value(AV, $) |
Effective 1 Jan 2014 |
Effective 1 Jan 2015 |
| First 30,000 |
10% |
10% |
| Next 15,000 |
11% |
12% |
| Next 15,000 |
13% |
14% |
| Next 15,000 |
15% |
16% |
| Next 15,000 |
17% |
18% |
| AV in excess of $90,000 |
19% |
20% |
- New Progressive Tax Rates for owner-occupied residential properties
|
Progressive Tax Rates |
||
| Annual Value((AV, $) |
Effective 1 Jan 2014 |
Effective 1 Jan 2015 |
| First 8,000 |
0% |
0% |
| Next 47,000 |
4% |
4% |
| Next 5,000 |
5% |
6% |
| Next 10,000 |
6% |
6% |
| Next 15,000 |
7% |
8% |
| Next 15,000 |
9% |
10% |
| Next 15,000 |
11% |
12% |
| Next 15,000 |
13% |
14% |
| AV in excess of $130,000 |
15% |
16% |