Most people in Singapore dream of owning a home at one time or another. This life time investment can work out beneficial if specific factors are taken into consideration. You have the option of renting a home if you are unable to incur the many expenses that go along with buying a home. Buying a home does benefit those who are ready with the ongoing expenses, like the taxes and the insurance besides the initial costs. One such cost which needs to be considered before you decide to buy a house in Singapore is the cost of Stamp Duty.
Stamp duty is the tax to be paid on documents related to the lease or purchase of a specific property. This needs to be paid to the IRAS (Inland Revenue Authority of Singapore). Most of the transactions related to leasing, buying or selling of property are subject to this tax. Stamp duty works out to a huge amount and thus, needs to be taken into account when you decide to buy a house in Singapore.
Types of Stamp Duty in Singapore:
*Buyer’s stamp Duty:
This stamp duty is for those buying residential properties in Singapore. The amount which needs to be paid depends on whichever is higher, either the market value of the property or the purchase price of the property.
*Additional Buyer’s Stamp Duty:
The additional buyer’s stamp duty (ABSD) is levied on in addition to BSD (Buyer’s Stamp Duty) on all those Singaporeans who purchase their second residential properties, Foreigners or non-individuals buying any residential property and permanent residents buying their first and other residential properties.
Present times have seen different rates in BSD and this depends on the property bought. It is different for residential properties and different for non-residential properties. The hike in BSD (Buyer’s Stamp Duty) tends to affect the high-ticket purchases the most. This includes bungalows, private condominiums which are expensive and en bloc purchases of property or land. This means the BSD does not affect those who decide to buy resale flats.
There are specific instances where the BSD is not applicable. These are
- Transfer of the HDB flat within the family
- Transfer of the assets upon amalgamation or reconstruction
- Transfer of the assets between entities which are associated permitted.
- Aborted purchase and sale of property
- Acquisition of land which is residential for a purpose which is non-residential.
If you fall under any of these categories you have to write to the IRAS within a time period of 14 days after you have acquired the specific property. You need to forward the letter of undertaking in original, copy of the letter of acquisition for complying with the conditions of remission.
Payment of BSD:
You need to pay the BSD within 14 days from the date of sale. If the transaction takes place overseas you are given a time period of 30 days to make the payment. You can make this payment online by e-stamping and using the e-form which is corresponding. It is important to prepare details of the transaction beforehand. This includes the address of the property and the personal information of the seller and the buyer. You also have to include the price of the property.
If the stamp duty is not paid by the deadline, the IRAS send a Demand Note which is a reminder. If the BSD is not paid and it is less than 3 months of the dead line you are penalized for either an amount which is equal to the payable duty or $10. If the delay is more than 3 months, the penalty is either 4 times of the payable duty or $25, whichever is higher. There is also a possibility of the IRAS taking legal action.
Seller Stamp Duty (SSD):
This stamp duty is applicable to all the residential properties or land which is sold within the first 3 years after the purchase date.
The total amount to be paid as the SSD is determined by the application of the requisite rate on either the price of selling or the current value in the market, whichever works out higher. The other factors which determine the SSD are the percentage rate of the SSD, the time of the transaction and the period of holding.
Exemptions from the SSD:
The SSD is exempted in the following scenarios
- The Public authorities (JTC or HDB) when exercising their functions or duties when selling the residential properties
- Housing developers who are licensed and have the Housing Developers governing them
- Those individual who own residential properties do not have to pay SSD if they have been declared bankrupt and need to sell the residential property due to this bankruptcy.
4. For transferors of sellers of the HDB flats who have either acquired or bought their flats after the 30th August 2010 and the property is identified for SERS (Selective Enbloc Redevelopment Scheme) but make a sale of the flat before the claiming of the HDB.
- Owners of residential property do not pay the SSD when the Government acquires their property due to the Land Acquisition Act.
- An owner of the HDB flat marries the owner of another HDB flat and is required to dispose one under the rules and regulations of the HDB need not pay the SSD.
Remission of SSD:
SSD can be remitted for transferors or sellers in case of the developer being non-licensed but is carrying on the housing development business in a lawful manner.
Payment of the SSD:
The payment of the SSD is done via the e-stamping portal. The law firms which represent the seller need to fill the declaration form of Seller’s Stamp Duty for Residential Purposes. It is mandatory that this form is completed with all the required details. It is not necessary to submit this form to the IRAS but the law firms have to retain the original declaration form for a minimum period of 5 years from the date of disposal/sale of a specific property as this might be required for the purpose of audit by the IRAS.