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Property law is a complex area that not many of us are familiar with. Hence, this article aims to educate you all about buyers’ and sellers’ stamp duty. Stamp duty is a tax levied on the purchase or lease of real estate. It is payable to the Inland Revenue Authority of Singapore (IRAS) in Singapore. At any point of time if you need a property lawyer to explain more details to you, just drop us a note!
Since 2018, stamp duty has been one of many property cooling measures to ensure Singapore’s property market remains stable and sustainable.
What you need to know about Singapore’s stamp duty is as follows:
In Singapore, there are three types of duties payable on the sale, purchase, acquisition, or disposal of real estate:
1. Seller’s Stamp Duty (SSD) – is a tax imposed on properties sold within three years of purchase.
The SSD gets imposed on early sellers to avoid a property market with inflated prices due to property flipping. It is a method of limiting the abuse of readily available deferred payment schemes. For example, if the downpayment is 20% of the purchase price, sellers will pay the remaining 80% two years later.
The SSD is a percentage of the value or price of the property sold, whichever is higher.
|Date of Purchase or Date of Change of Zoning / Use||Time frame for Holding||SSD rates based on the actual price or market value,|
whichever is greater (%)
|On and after March 11 2017||Up to one year||12|
|Greater than one year and up to two years||8|
|Greater than two years and up to three years||4|
|More than three years||There is no SSD payable|
The Total Debt Servicing Ratio (TDSR) – which allows homebuyers to borrow only up to 60% of their gross monthly income – is another property price cooling measure. It has been in the works since 2013. It is to prevent home buyers from borrowing too much to finance the purchase of a home. Borrowing too much money limits the amount that home buyers can borrow for subsequent properties.
A bank loan allows property owners or homebuyers to borrow up to 75% of the property’s value. For the second property, the loan-to-value (LTV) ratio drops to 45 percent for loan tenures up to 30 years, or 30 percent if the loan tenure exceeds 25 years or the owner reaches the age of 65, implying that purchasing a second property requires significantly more cash than buying the first.
Homebuyers can also make cash down payments using the CPF savings account, but this is subject to the following conditions:
Finally, there is payable stamp duty on rental tenancy agreements, which a person must pay when they rent a home or sign a contract to renew or extend their current lease.
The Average Annual Rent (AAR) determines the amount and calculates it using the monthly rent and lease period.
Assuming a monthly rent of S$3,000 and a lease term of 24 months, the AAR and lease duty rates would be as follows:
AAR: $3,000 x 24 months = $72,000
Lease duty rates: 0.4% x 72,000 = S$288
2. Buyer’s Stamp Duty (BSD) – payable on the purchase or acquisition of all properties. The purchase price or market value of the property (whichever is higher) determines the BSD.
|The property’s purchase price or market value||Residential property’s BSD rates (%)||Non-residential property’s BSD rates (%)|
|The first $180,000||1||1|
|The remaining sum||4|
Here’s an IRAS example of a BSD payment due for a condo unit purchased in 2018 for $2,500,550 (market value):
|The property’s market value||The BSD rate (%)||Calculation|
|The first $180,000||1||= $1,800 (1% x $180,000|
|Following $180,000||2||= $3,600 (2% x $180,000)|
|Following $640,000||3||= $19,200 (3% x $640,000)|
|Remaining $1,500,550||4||= $60,022 (4% x $1,500,550)|
|BSD Payable||= $84,622 ($1,800 + $3,600 + $19,200 + $60,022)|
3. On the second or subsequent property, buyers pay the Additional Buyer’s Stamp Duty (ABSD). It is in addition to the BSD, which varies depending on the buyer’s residential profile. The ABSD rates were last revised in 2018 as a cooling measure to stabilize the residential property market for local Singaporeans and avoid the risk of a more drastic price correction – to discourage foreigners and entities from purchasing residential properties.
ABSD applies to the following residential profiles:
|Singapore’s Additional Buyer’s Stamp Duty (ABSD)|
|Rates on or before|
the 5th of July, 2018 (%)
|Rates beginning on or|
after July 6, 2018 (%)
|Singaporeans||Purchase of first residential property||0||0||There is no change|
|Purchase of second residential property||7||12||Up 5%|
|Purchase of a third and subsequent residential property||10||15||Up 5%|
|Singapore Permanent Residents||Purchase of first residential property||5||5||There is no change|
|Purchase of second and subsequent residential property||10||15||Up 5%|
|Foreigners||Purchasing any type of residential propert||15%||20%||Up 5%|
|Entities (e.g. Developers)||Purchasing any type of residential property||15%||25%||Up 10%|
|An additional 5% for developers||New|
Exceptions and waivers:
Nationals and Permanent Residents of Iceland, Liechtenstein, Norway, Switzerland, and US Nationals, are subject to Stamp Duty treatment like Singapore citizens. As a result, when purchasing their first residential property in Singapore, these individuals may apply for ABSD remission.
There may be a waiver of ABSD for married couples who jointly purchase a second residential property.
What is the latest update for Buyer’s Stamp Duty (BSD) calculation for Singapore Citizens and Singapore Permanent Residents buying a property in Singapore in 2023?
During the Budget 2023, the Government announced that BSD rates for both residential and non-residential properties will be raised with effect from 15 Feb 2023. There is a transitional BSD remission for properties acquired on or after 15 Feb 2023 such that the former BSD rates will apply, subject to the remission conditions being met.
|Higher of Purchase Price or Market Value of the Property||BSD Rates|
|Residential Property||Non-residential Property|
|Next $500,000||4%||4% (NEW!)|
|Next $1,500,000||5% (NEW!)||5% (NEW!)|
|Amount Exceeding $3,000,000||6% (NEW!)|
If you are still confused after reading this article, feel free to hire property conveyancing services to be more informed of the choices you are making. Having the best property lawyer can make a world of difference.