If you decided to relocate to one of the world’s safest tax havens, you might consider buying a property in the city-state. Before starting to search for your new home, there are certain taxes on a property purchase in Singapore that you should be aware of. These taxations consist of: the stamp duty tax, goods and services tax (GST), seller stamp duty tax, yearly property taxation and rental income tax.
Below, our accountants in Singapore explain the main taxes associated with buying real estate in the city-state. Also, if you need assistance in computing these or other taxes related to owning a property, no matter if it is used for residential or commercial purpose, you can rely on us.
The main costs associated with buying real estate in Singapore
Singapore is one of the most appealing real estate investment destinations in Asia and Southeast Asia because of the high value properties have. This is why you should know that these cost above the average price in the rest of the region.
If you are interested in buying a property in Singapore, you need to consider the following costs:
- the costs related to having the paperwork drafted and notarized,
- the reservation of the property which takes the form of an advanced payment,
- the buyer’s stamp duty and the additional stamp duty,
- the real estate agency’s fee, if you have used such services.
When it comes to the additional stamp duty, it should be noted that this only applies to Singapore citizens who purchase a second home. So, if you are a foreign citizen who wants to buy a property in the city-state, you will only need to consider the stamp duty.
Our Singapore accountants can help you compute the taxes and costs related to buying a home here. We can also assist companies seeking to purchase commercial real estate, however, this matter is more complex, therefore requires more attention.
Types of properties that can be bought in Singapore
If in the case of commercial real estate, the options of buying them are simpler, as this is often divided into office spaces/buildings and industrial sites, it is not the same when it comes to private properties.
The following types of private properties can be purchased in Singapore:
- real estate developed by private investors,
- HDB real estate.
These can be divided into flats and condominiums. In the case of HDB real estate, this is short for Housing Development Board, this is the main housing authority in the city-state. Such properties can be purchased under special conditions, however, the taxes related to them are usually the same as those of privately developed projects.
There are many aspects to consider about the taxation of real estate and our accounting firm in Singapore can offer detailed information on the regulations applicable. Also, if you consider you need help in computing the taxes you will need to pay before and after buying a property, you can rely on our specialists.
We invite you to watch the following video on the taxes applicable for property purchase in Singapore:
The stamp duty tax in Singapore
As one of the taxes on property purchase in Singapore, the stamp duty tax is applied when you acquire a residential and commercial real estate in the city-state. Its rates are levied as follows:
- First SGD 180,000: 1%;
- he following SGD 180,000: 2%;
An accounting expert in Singapore can provide more details on this type of tax in the country.
The goods and services tax (GST)
The goods and services tax is another taxation on property purchase in Singapore which is applied when you buy a commercial property, if the seller is GST registered. The GST rate in Singapore is currently set at 7%.
The seller stamp duty tax
The seller stamp duty taxation is applied on residential and industrial real estate. Its rates are as described below:
- Sell within 1st year: 16% of selling cost or valuation, whichever is higher;
- Sell within 2nd year: 12% of selling cost or valuation, whichever is higher;
- Sell within 3rd year: 8% of selling cost or valuation, whichever is higher;
For sell within more years, our accountants in Singapore can provide you with the exact rates for this type of taxation.
The yearly property taxation in Singapore
Just like in any other state, owning a property in Singapore requires the payment of yearly property taxation. This type of tax on a property purchase in Singapore depends on whether the real estate is owner-occupied or it is investment real estate.
For owner-occupied real estate, the yearly property tax rate ranges from 0% for a yearly value (YV) of first SGD 8,000 to 16% for a YV of over SGD 130,000. As for non-owner occupied real estates, the rates range from 10% for a YV of first SGD 30,000 to 20% for a YV of over SGD 90,000. An accountant in Singapore can provide more information on this matter.
The rental income tax
The rental income tax in Singapore is the real estate tax which is due if you rent a part of or the entire real estate. The net rental income tax rate is 20% for foreign citizens; however, it will be increased to 22% starting with the Year of Assessment 2017.
How are property taxes calculated in Singapore?
Singapore property taxes are calculated in percentages which depend on the type of real estate to be bought and its value.
In the case of properties developed by the HDB, the duty stamp represents up to 3% of the non-residential types and up to 4% on residential ones. Also, for second-time buyers, the additional stamp duty can increase to 30% of the property to be purchased.
When it comes to the calculation of the property tax to be paid once one has become a property owner, this can be calculated based on the annual value of the real estate or on the occupancy status, given the fact that it is common for such homes to be rented.
It is recommended to calculate the taxes to be paid on a property before the actual acquisition, and if you need guidance in this sense, our Singapore accounting firm is at your service for advice and simulations on the taxes, fees and other costs you need to consider when making such an important investment.
The annual value of a property
Before buying a property, it is important to know its annual value, as based on it you will pay the Singapore property tax. This is established by the Inland Revenue Authority (IRAS) and it can fluctuate.
Most of the times, the following factors influence this value:
- market rental value which even if it can increase or decrease, the percentages are low,
- the value of the other properties in the same area.
An important aspect to consider is that from the annual value the maintenance fees and furniture rental (where the case applies) will not be considered.
The IRAS will send notifications with detailed information on the amount of money to be paid based on the rates calculated for the respective year.
If you need information on the property taxes to be paid in Singapore, you can obtain recent information from our accountants.
We are also specialized in helping Singapore and foreign companies, and overseas investors interested in doing business in the city-state, so if you need guidance on corporate accounting matters, we are at your disposal with tailored advice on all tax-related matters.
Please get in touch with our accounting firm in Singapore to calculate the exact rates of the taxes on your property purchase.