The Common Types Of Stamp Duty (Singapore)
Who said buying a house means you only need to make payment for the property? An individual has to also pay costs for legal fees, home loan interest, and stamp duty charges.
Every residential property purchased in Singapore comes with an added financial factor, the Buyer’s Stamp Duty (BSD). This is a form of property tax that has to be paid within a certain period of creating the purchase agreement.
Additionally, if you own another property, or if you are a foreigner, get ready to make the payment for extra property tax. This is known as Additional Buyer’s Stamp Duty (ABSD). ABSD rates were brought upon property buyers in Singapore as cooling measures to regulate the activity of over-active buyer’s in the property market.
Also, all the payments for stamp duties in Singapore go to the Inland Revenue Authority of Singapore (IRAS). Whether you are purchasing condominiums or apartments, Singaporeans or foreigners, individual or non-individuals, the liability to pay Singapore property stamp duty is unavoidable.
What Does Stamp Duty Mean?
Stamp duty is a form of tax that both citizens and overseas members have to pay when purchasing or leasing a property. It is generally charged with the purchase agreement/tenancy agreement.
There is a time limit of 14 days for a Singapore permanent resident buyer to clear the payment, starting from day one of the purchase agreement (provided the signing was done in Singapore). In case of the buyers being foreign nationals and the document-signing being done overseas, a 30-day stamp duty payment cut-off is allowed.
Remember, the main property handing-over document must face acceptance from the government of Singapore. This will only happen when the stamp duty is paid. Irrespective of a flat, condominium, bungalow, or empty land, if the main agreements are used without stamp duty payment, it is considered as a crime.
What You Need To Know About Buyer Stamp Duty
Buyer Stamp Duty is the mandatory one of all stamp duties in Singapore. Whenever initial property transactions are made, with the purchase/sell/renting of properties, BSD is a must. These BSD rates can vary based on market value and the original purchase price estimate.
Once the sale/purchase agreements or Option to Purchase (OTP) documents are formulated, signed, and accepted, the BSD will be charged. For all kinds of purchase documents, the seller or buyer would be responsible for paying either of the stamp duties.
If you’re looking to several chunks of property entities, then make a note, the costlier the purchases, the higher the BSD rates.
How Is BSD Calculated?
Calculating a BSD has a few core elements that can change the prices for each owner. It doesn’t matter whether you are adhering to the market value or quoting your purchase price, but the first two charges are 1% on each $180,000 you pay. Once you have hit 2% BSD, 3% of buyer stamp duty is charged until you hit another $640,000.
If you are buying non-residential or residential properties, the prices remain the same. Check out the example below if you’re looking for a quick formula to calculate the BSD:
If the property costs below $1million, you can calculate the BSD by: (three percent multiplied by the purchase price or market value) minus $5,400
This should give you an idea of the amount of money you have to pay as part of the compulsory BSD.
What You Need To Know About Additional Buyer Stamp Duty
Additional buyer stamp duty is based on your PR status, the number of residential properties you own, and the current state of ownership of these properties. To sum this up, if you fulfil any of the below conditions, you are liable to pay additional stamp duty.
- Are a foreigner
- Individuals who have acquired their PR
- Singapore citizens who already own one or more residential properties
Basically, ABSD is known to raise property prices for all buyers except for Singapore citizens who are purchasing their first very first residential property.
ABSD was introduced in 2011, and further, the ABSD rates were amplified in 2013. This was initially done as part of cooling measures to create restrictions for outsiders. But the government soon realized that foreigners and Singapore permanent resident s (owner of more than home) are creating a reliance on the property market on themselves.
If you’re wondering what kind of properties are considered as residential properties:
- Condominium (X room condo)
- HDB flats
- Terrace houses
- Customer house-like flats
Cases where an HDB flat/shop has a living area, whether in full or even in part, it would be considered as a residential property, and ABSD rates are accordingly charged. You’ll be surprised when you see the details and total amount of the ABSD rates. These purchases will make you think twice.
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Additional Buyers Stamp Duty Remission
There are cases where foreigners/PR citizens can be exempted from paying property ABSD. Couples with one foreigner and one PR citizen who have no property in Singapore will receive additional buyer stamp duty remission.
Even married couples who are switching between homes must make sure to find a buyer for the 1st property within 6 months of shifting to the new property. This relieves them of ABSD.
Knowledge tip: Additional Buyer Stamp Duty (ABSD) was introduced to reduce the number of entities (non-individual buyers) from acquiring residential property in Singapore.
How Is Additional Buyer’s Stamp Duty Calculated?
Stamp duty – ABSD rates are much higher than BSD rates. If you’re making your first property purchase, as a Singapore PR, you would have to pay 5% ABSD. A Singapore PR citizen making their second property purchase has to pay 15% ABSD.
Similarly, a foreigner who is making their first or second property purchase has to pay a whopping 20% ABSD either way. And speaking of a Singapore citizen purchasing their second home, they would need to pay 12% ABSD on their second residential property.
There are times where the government is understanding and provides assistance in making housing more affordable. Sellers who seal a contract of their first home before signing the OTP agreement for 2nd residential property will be pardoned of ABSD. In case you are shifting from a condominium to an HDB flat, the accuracy of Singapore’s legal property system will ensure you are free of ABSD.
- The IRAS will inform your bank, tenant, or employer to clear the BSD or ABSD in a scenario where you do not pay it in time. This could lead to action being taken against you by the concerned authorities.
- Not paying BSD or ABSD for 3 or more months could lead to a penalty extending up to 2 times your original stamp duty charges.
- Not selling your first property and yet trying to avoid ABSD could be a risk to your homeownership rights.
Frequently Asked Questions
Can I pay stamp duty using CPF?
Yes, a Singaporean citizen can pay stamp duty by using their Central Provident Fund (CPF) . This applies to both BSD and ABSD. Although the process doesn’t directly work in your favour, You have first to pay the BSD and ABSD yourself and then demand reimbursement from the CPF board.
This process will work for a Singaporean citizen and also a foreigner who has acquired permanent residency. However, the individual has to be a working professional in Singapore.
Where can I pay stamp duty in Singapore?
You can pay stamp duty on property agreements in Singapore using the following 3 channels:
- Firstly, you can use the Singapore e-Stamping Portal and either pay via eNETS, cheque, or a cashier’s order.
- Secondly, you can pay via the IRAS website or the IRAS surf centre e-Terminals. This channel accepts cashcard payments and also NETS and eNETS.
- Thirdly you can use the SingPost Service Bureaus at either of the following 3 locations: Shenton Way, Chinatown Novena, or Raffles Place. All these SingPost service centres accept cash, cheques, NETS, and even cashier’s order.
Who pays stamp duty for rental in Singapore?
The party responsible for paying stamp duty for rental in Singapore is usually mentioned in the rental agreement. In the event you are making a purchase, the sales and purchase agreement would have your name. Thus, as a purchaser, you have to pay the stamp duty charges. Whereas, if the document being billed with stamp duty is a Surrender of Lease with a Payment agreement, the landlord has to pay the stamp duty charges.
Singapore stamp duty charges may be too high for the common man, but there is plenty of quality and affordable housing options available. Make sure you have an idea of the BSD and ABSD related rules, terms, and conditions. You never know when you may just be eligible to evade the ABSD part of it.
ABSD rates cannot be reduced due to the number of interested buyers overseas. Neither can they be increased, as the day-to-day Singapore citizens would struggle to cope with the inequality in income and property prices.
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