All You Need To Know About Rental Stamp Duty In Singapore

How To Calculate Stamp Duty Singapore - Feature Image

Whether you’re an expatriate seeking a residence in Singapore for the upcoming year, or a local in search of temporary housing during the construction of your home, you are regarded as a tenant.

As a tenant of rental units in Singapore, your agent or landlord will most likely let you know that rental stamp duty needs to be paid according to government policies to the Inland Revenue Authority of Singapore (IRAS), the statutory body responsible for tax collection in Singapore.

The majority of Singapore property owners are familiar with renting agreements and rental stamp duty. However, Singapore rental stamp duty is sometimes overlooked. In this article, you’ll discover all the important information about stamp duty so you can avoid legal ramifications.

Types Of Options And Practice For Renting Properties

What Is Rental Stamp Duty?

Stamp duty refers to a tax borne by the tenant and is payable on documents relating to the lease or buying of immovable property. It is payable as a fixed sum within 14 days upon the signing of the document, such as the Tenancy Agreement or the Sale & Purchase Agreement.

In addition to the security deposit and the monthly rent, tenants are obligated to pay stamp duty. It must be paid once the tenant rents a unit or room in the house or the whole house, or once the landlord extends or renews the property lease.

The Tenancy Agreement is officially recognized by the relevant government departments once all the relevant seals and stamps have been affixed and the stamp duty fully paid.

Renting Property & Sales Process - Market Value

Who Pays For The Stamp Duty?

When it comes to rental agreements, stamp duty is paid by the tenant. However, there are situations where arrangements are made for the landlord to bear the costs. In order to avoid issues, a HDB tenant should indicate the payee in the tenancy agreement.

If there are issues and the tenancy agreement doesn’t indicate who should pay, IRAS will adhere to the guidelines contained in the Third Schedule of the Stamp Duties Act. [1] Any tenant who is not conversant with the process may get a rented property agent to help them out.

Insights On Property, Leasing Property Application

How Much Are You Supposed To Pay?

How much one is supposed to pay will vary depending on the monthly rent and the length of the property lease period. Generally, the higher the rental amount and the longer the lease period, the higher the amount of tax (rental stamp duty) that needs to be paid.

To simplify things, let’s take a look at the formula for determining rental stamp duty for any Singapore property with fixed rental rates. You should also note here that there are different ways of calculating stamp duty for a real estate lease where the premium is involved, a lease with assignment or novation involved, leases with staggered market rent rates, leases with an extension of lease duration, or increased rental rates.

However, we shall discuss properties with fixed rental rates, since are the most commonly used so as to make things easier for you. So, how is the stamp duty calculated? Here’s how stamp duty is calculated:

If the average annual rent is more than S$1,000 (a thousand Singapore dollars), and the lease period is 4 years or less, the method for calculating rental stamp duty payable should be 0.40% of the total rent for the whole property lease period.

Example 1: For A Lease Below 3 Years

If the fixed monthly total rent is $1,000 for a 3-year lease, then the renting stamp duty calculation should be as follows:

Total rent over 36 months = 36,000

Stamp duty payable = 0.4% x 36,000 = $144

Example 2: For A Lease Exceeding Four Years

If the fixed monthly rent is $1000 for a 5-year lease, then the stamp duty calculation is as follows:

0.4x4x the average annual rent

0.4x4x$1,000x 12 months =

0.4% x 4 x 12,000 = $192

Exemptions

For a property lease where the average annual total rent is $1000 and below, there’s no rental stamp duty borne by the tenant. One tip on calculating stamp duty is that you are required to pay is to use the formulas above.

However, the fastest method to determine stamp duty payable is to utilize the stamp duty calculator provided on the official IRAS website and enter the relevant figures, including the rental rate, period of lease, and other relevant figures. Once you key in the correct figures, you’ll be able to see the amount of rental stamp duty payable on the stamp duty calculator.

Pay The Stamp Duty - Documents Required For Service

Where Can You Stamp Your Tenancy Agreement?

If tenants decide to stamp their tenancy agreements on their own, they can easily do that via the official IRAS website. Otherwise, one can visit one of the following service bureaus to complete the process physically.

1. Novena Post Office

Address:

  • Revenue House, 55 Newton Road, #01-02, Singapore 307987

Business Hours:

  • Mon – Fri: 8.30am – 5.30pm
  • Sat: 8.30am – 1.00pm

2. Raffles Place Post Office

Address:

  • Ocean Financial Centre, 10 Collyer Quay, #B1-11, Singapore 049315

Business Hours:

  • Mon – Fri: 8.30am – 6.00pm

3. Shenton Way Post Office

Address:

  • Downtown Gallery, 6A Shenton Way, #03-23, Singapore 068815

Business Hours:

  • Mon – Fri: 8.30am – 6.00pm

4. Chinatown Post Office

Address:

  • People’s Park Centre, 101 Upper Cross Street, #B1-17A, Singapore 058357

Business Hours:

  • Mon – Fri: 9.30am – 6.00pm

Payment Slip Document For Exceeding 3 Months - Whichever Is Greater Option

What Documents Do You Have To Bring?

The required documents include the following:

1. Tenancy/lease document for the room, home, or property that a tenant wants to pay stamp duty for.

2. Details of all the parties involved. These may include:

  • Profile (Singapore Citizen, company, foreigner, Singapore PR)
  • Nationality (a foreigner or Singapore PR)

Calculations For Rental Stamp Duty For Tenancy Less Than 4 Years

What Are The Payment Options?

Paying stamp duty is quite easy. The IRAS’ e-stamping duty portal (which can be found under the e-services tab) makes it easy and convenient for tenants to make their rental stamp duty payments online. All you need to do is to input the correct details and make the required payment, after which they will receive a stamp certificate reference number.

Stamp duty payments can be made via GIRO, bank transfer, eNETS, cashier cheque, FAST, AXS Kiosk machines, and more. However, the amount should be paid in full since installment payments are not allowed. For any amounts below $2000 or equal to your daily withdrawal limit, the payee would require an internet banking account with Standard Chartered Bank, Citibank, OCBC, UOB, or DBS/POSB.

Renting Property & Sales Process - Market Value

When Should You Pay The Stamp Duty?

Ideally, the tenancy agreement must be duly stamped before a tenant or a landlord can sign it. Nonetheless, that is not always the case. In fact, a tenancy agreement may still be stamped, without any penalty, if the following conditions are met:

  • Payment for stamp duty must be made within 14 days after the tenancy agreement has been signed in Singapore in order to avoid any penalty.
  • For tenancy agreements signed overseas, rental stamp duty must be paid within 30 days after the tenancy agreement has been received in Singapore to avoid any penalty.

Penalties For Failure To Pay Within 3 Months

For late payments made within three months, the tenant would incur a \$10 late payment penalty or an amount up to the rental stamp duty payable or whichever is greater, whether the tenancy agreement may be signed in Singapore or signed overseas.

Penalties For Payment Exceeding 3 Months

For tenants who are late in making stamp duty payments exceeding 3 months, a $25 late payment penalty, or an amount 4 times the rental stamp duty payable or whichever is greater is imposed.

Failure to pay rental stamp duty is the same as tax evasion and tax evasion is a legal offence. The IRAS could initiate an investigation into a tenant’s tax status and the penalty may be a fine of up to 5 thousand Singapore dollars (S$5000) along with an interest in IRAS’ discretion.

Landlords won’t be spared either. Because the tenancy agreement has not been officially recognized by the statutory body IRAS, landlords could face legal action for illegally leasing out their property. As you can see, both the landlord and the tenant could face dire consequences by authorities for failing to pay rental stamp duty.

If you are a landlord and would like to know if your tenant has actually completed paying their stamp duty dues, received the document along with the stamp certificate reference number, go online and check at the IRAS website.

Conclusion

Renting a property in Singapore can be a tricky process for both the landlord and the tenant. It is difficult to keep up with all the procedures and regulations relating to leasing a home or unit, so this information has hopefully answered your questions. However, it’s strongly recommended to make proper plans to pay the stamp duty ahead of time. Take into consideration the time frame defined and make sure to plan and stamp the documents promptly to avoid incurring penalties.
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