Property Tax Singapore

August 27, 2019
Posted in Tax
August 27, 2019 fanny

Property Tax Singapore

There is a wide range of options available for investing in Singapore. This is one apt place to invest in as Singapore is an emerging economy which is considered ‘strong’ and reliable. This is also known for its integrity rule of law, productivity and a lot more. It is a known fact that the national reserves of Singapore are abundant sufficiently to even withstand recession for 10 years. The corruption here is considered as almost negligible and the tax rates and the tax laws are considered competitive.

Basics on Property tax Singapore:

Every year on the 31st of January the homeowners and the property investors are required to pay the property tax in Singapore. There are many investors who have not totally understood the calculating of this property tax. Apt knowledge of the property tax can assist you in managing your funds in the right manner.

What is Property Tax?

A tax which is levied on all owners of property in Singapore is the property tax. This is applicable immaterial whether the property is left vacant, rented out or owner-occupied. This is separate from the normal income tax which is determined by the specific rental income from the property lease. In case you rent out a property you will have to pay the income tax and also the property tax, Singapore. This can definitely lead to dent in your pocket. There is also ABSD (Additional Buyer Stamp Duty) to take note of if you are investing in additional properties.

property tax singaporeCalculation of Property Tax:

Property tax, Singapore is calculated by taking into account the AV (Annual Value) of each property. You need to calculate the property tax, Singapore which is payable by using the formula listed below.

Annual value x Rate of property tax = payable property tax.

There are quite a few investments available which can help you save on the property tax.

The property’s annual value is derived on the basis of the annual rent which the property can probably fetch in case you were to rent this out. The IRAS considers the rentals of properties which are similar in that specific area before determining the Annual Value. The condition and the size are also taken into consideration.

Investing in a Property in Singapore:

Before opting for property investment, it is advisable to get a thorough knowledge of the positives and negatives of the specific investment.

Pros of Property Investment:

  1. Returns are Stable:

Globally, the cost of real estate has drifted in the upward direction providing stable and average returns to the investors.

  1. Real Estate Booming:

Singapore is one of the leading hubs for real estate in the whole of Asia and thus attracts a number of investors from around the world. It is quite easy buying property here.

  1. Economy which is Diverse:

As the economy of Singapore is diverse to a large extent, investing in property works well here. There are economic ties to financial services, real estate and also shipping. The tourism industry adds to the boost in the economy.

  1. Ease of Maintenance:

Maintaining any property in Singapore is easy. There is no dearth of labor required to carry on any repair work. The Management Corporation Strata (MCST) and the government ensure that the maintenance of the building structures like Private Condominium or HDB is looked after.

Searching for handyman is easy and convenient.

Cons of Property Investment:

  1. Massive Capital:

You need to save and scrimp for a minimum of 5 years to be able to invest or rent out a property in Singapore. The Government, since 2009, has introduced multiple cooling measures to ensure there s no property bubble crisis in Singapore. With the Total Debt Servicing ratio and Additional Buyer Stamp Duty (ABSD) in place you need additional capital to be able to invest in property here.

  1. Illiquid Asset:

Real estate s considered as an illiquid asset as it is not convenient or easy converting this into cash on an immediate basis in case of an emergency. The real estate market faces a lot of fluctuations and thus you need to have the time and patience to ensure you can sell this for the required profit.

  1. Incurs buyer/seller stamp duty

Singapore citizens
ABSD rate on purchase of first propertyNot applicable
ABSD rate on purchase of second property12%
ABSD rate on purchase of third and subsequent property15%

 

Singapore Permanent Residents
ABSD rate on purchase of first property5%
ABSD rate on purchase of second property15%
ABSD rate on purchase of third and subsequent property15%

 

Foreigners
ABSD rate on purchase of first property5%
ABSD rate on purchase of second property15%
ABSD rate on purchase of third and subsequent property15%

Source: https://www.propertyguru.com.sg/singapore-property-resources/singapore-buy-property-guides/what-you-need-to-know-about-additional-buyer-s-stamp-duty-13034

  1. May have Headache over Tenants

Some of my clients have problems in renting out their rooms and they also have to lower their rental amount in order to attract tenants to on board and stay. It makes sense to diversify your portfolio not just in property rental but also in other financial instruments which can make your money work harder for you without the need to rent out your place.

For that apt investment in Singapore which can assure you of guaranteed returns and your principal you can plan on

You can have choice of the fixed deposits and the Singapore savings Bonds. The Singapore savings bonds guarantee the capital and the returns. However, they are having very low returns of at most just 2%per annum which is unable to beat inflation in Singapore.

You may wish to explore the below plans giving up to 6%per annum upon seeking advice from us, which are

1) capital guaranteed retirement plans (meant for Retirement Income)

2) Whole life plans paying income for Life (meant for Wealth Preservation)

3) Short Term Bonds with 2-4 years maturity (meant for Dividend income)

It is advisable to seek advice from qualified professionals like us (link to TheFinLens.com’s contact page) before you decide on any specific investment or even invest in a specific property if you find the property tax, Singapore works well with the investment.

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