Singapore real estate has consistently high demand from Singaporeans, PRs, and foreigners. In a naturally heated market due to the country’s small landmass and high-quality lifestyle, it has to use safeguards that reduce inflation and ensure enough property supply for all Singaporeans and foreigners residing in Singapore. That’s where stamp duty comes in.
Unfortunately, the topic of stamp duty can be quite confusing. Plenty of complex calculations and technical components might cause buyers to scratch their heads during the first time they encounter them. With this in mind, we made this short but easy-to-understand guide. Find out on how to invest property.
What is Stamp Duty?
Stamp duty is a tax placed on property purchases in Singapore. The higher the stamp duty, the more expensive the property can be. When purchasing a property in Singapore, stamp duty is one of the many costs to consider. All HDB flats and condominiums have their respective stamp duty costs.
The buyer must pay stamp duty within 14 days after the document’s issuance. Any sale and purchase agreement or tenancy agreement falls within this 14-day timeline if buyers will sign it in Singapore. Otherwise, the stamp duty must be signed and paid within 30 days after buyers receive it in Singapore and go abroad.
What is Buyer’s Stamp Duty (BSD)?
A buyer’s stamp duty is the payment for administrative and processing costs involved in receiving their option to purchase or sale & purchase agreements on residential properties. This amount is payable on the property’s market price for first-time buyers and those buying their second residential property.
The main difference between buyer’s stamp duty and stamp duty in Singapore is that buyer’s stamp duty is an ad valorem tax that the buyer pays on the purchase price, whereas stamp duty in Singapore is a fixed charge.
An ad valorem tax is a tax that is calculated as a percentage of the value of the object being taxed. An example is the property tax on a house, which might be 2% of the assessed value.
Here’s an example computation of a Singaporean buyer’s stamp duty for residential properties.
|Payment Schedule||% of Stamp Duty|
|On the first S $180,000||1%|
|On the 2nd S $180,000||2%|
|All property values beyond||3%|
What is Additional Buyer’s Stamp Duty (ABSD)?
Additional buyer’s stamp duty (ABSD) is a tax imposed on the purchase of residential property in Singapore. ABSD was introduced in 2011 as a property cooling measure to address the heated market and prevent speculation. It incurs a tax rate on property purchase price depending on the region it is located in.
Here are the ABSD rates property buyers will deal with in Singapore.
|1st Property Purchase||2nd Property Purchase||3rd Property Purchase and Beyond|
|Singapore Citizen||Not Applicable||12%||15%|
|Singapore Permanent Resident (SPR)||5%||15%||15%|
Is Stamp Duty Required For All Singapore Residential Property Purchases?
Yes, it is. Stamp Duty is a government tax imposed on all residential property purchases in Singapore. The amount of stamp duty payable will depend on the type of property being purchased, the purchase price, whether it is an individual or company buying. Therefore, all prospective buyers should prepare enough to pay for their buyer’s stamp duty and ABSD where applicable.
Will You Pay Stamp Duty Together in a Joint Property Purchase?
Yes. If you buy a property with your spouse, you both need to sign the contract and be listed as buyers. You will both pay the stamp duty together with the government selecting the higher BSD or ABSD for your property.
For example, you have two properties, and your spouse has one. You incur a 20% ABSD while your spouse only has 10%. The government will select the 20% ABSD as your joint stamp duties.
Case Study on Computation of Total Buyer’s Stamp Duty
To illustrate the total BSD and ABSD you’ll pay for a property purchase, here’s a sample case study and computation.
Let’s assume a foreigner in Singapore intends to purchase an executive condominium worth S $2 million in Singapore. Based on the table above, they have to pay an ABSD of 20%, including the property amount.
Here’s the total stamp duty they’ll need to pay.
|1% of the 1st S $180,000||S $180,000 x 1%||S $1,800|
|2% of the 2nd S $180,000||S $180,000 x 2%||S $3,600|
|3% on the remainder||S $1,640,000 x 3%||S $49,200|
|BSD payable||–||S $54,600|
ABSD Payable: 20% on $2,000,000 = $400,000
How to Pay For Your Stamp Duties
You can pay for your BSD and ABSD using the following payment methods
- Internet Banking Fund Transfer
- Cashier’s order cheque
- Singpost Service Bureaus
- CPF funds (for Singaporeans only)
What Happens if You Pay Your Stamp Duty Late?
If you paid your stamp duty later than 14 days (30 days for international purchases), you’ll receive a Demand Note that states the late penalty fee you’ve incurred for missing the payment deadline.
Stamp duty payments delayed for three months can incur an additional S $10 or any amount equal to four times the BSD or ABSD amount. Anything beyond three months of delay will be about S $25 or four times the BSD or ABSD payable.
FAQs To Enrich Your Stamp Duty Knowledge
What’s The Difference Between BSD and ABSD?
A buyer’s stamp duty is a lump-sum tax that is imposed on the purchase of private residential property. Additional buyer’s stamp duty is a progressive stamp duty that is imposed on the purchase of private residential property above a certain price.
Both stamp duties cool off Singapore’s real estate market that only has limited supply and very high demand. These stamp duties slow down supply sales, especially for the affordable HDB flats that limit their prospective buyers based on their income, too.
Should I Still Pay For BSD After Paying For ABSD?
The recently-updated implementation of the buyer’s stamp duty (BSD) in Singapore means that you are now required to pay for both BSD and ABSD. However, Singaporeans don’t have to worry about ABSDs for their first property purchase.
On the other hand, Singaporean PRs have to pay 5% ABSD on their first property purchase. In comparison, foreigners and purchase-holding entities (like REITs and real estate management companies) have to pay 20% and 25% respectively for their first property purchase and beyond.
Is Rental Stamp Duty (RSD) Different From BSD and ABSD?
Rental Stamp Duty (RSD) is completely different from BSD and ABSD because it involves tenants and landlords. In most cases, tenants pay for RSD as stated in their tenancy agreement unless the landlord indicates otherwise. Rental stamp duties are calculated as follows:
|Renting for Less Than Four Years||Renting For More Than Four Years/ For an Indefinite Period|
|0.4% of the total rent for
the lease period
|0.04% of four times the
average annual rent for the
Thus, if a tenant agrees to pay S $800 for their monthly property rental for less than four years, they will pay S $803.2 in total for the month.
On the other hand, they’ll pay a total of S $800.32 for four months only if they’re leasing a property for more than four years.
What is Seller’s Stamp Duty (SSD)?
A seller’s stamp duty functions similarly to BSD. It’s a property tax that sellers pay after a three-year holding period. For example, HDB property owners selling their properties after three years will have to pay SSD. Alternatively, those who go beyond the minimum five-year occupation period won’t have to pay any SSD.
Seller stamp duty is also paid upon property acquisition through inheritance, divorce, or within the family if you sell it to anyone you know. Properties purchased before 20 February 2010 are excluded from SSDs.
Do Property-Holding Entities Have Additional Dues When Buying Properties?
Property-holding entities (PHEs) hold at least 50% of its assets with prescribed immovable properties (PIP). According to the government, PIPs are properties that are in a residential and commercial zone and have mixed used cases for so long as it includes a residential aspect.
PHEs deal with higher stamp duties because of their activity’s nature.
For example, if a buyer uses a PHE to acquire their property, they’ll pay a fee called additional conveyance duties (ACD), subcategorized as additional conveyance duties of buyers (ACDB).An alternative for sellers who use PHEs exists, named as additional conveyance duties of sellers (ACDS).
Does Singapore Ever Discount Stamp Duty?
All stamp duty calculations and rates are permanent and cannot change unless prescribed by the public constitution. Therefore, it is not most likely to change unless Singapore’s real estate market sees drastic changes in demand and supply within the next few years.
How Soon Should I Pay My Stamp Duty?
A deadline of 14 days exists for all buyer stamp duties and seller stamp duties in Singapore. Properties purchased outside the country have a 30-day deadline for payment. Missing these payments will have buyers receive a Demand Note and pay a fine based on the value of the property.
With this in mind, it’s crucial to pay your stamp duty on time and completely to avoid any delays and added penalties.
Who Pays For Stamp Duty?
Buyers, sellers, and purchasing entities pay for their respective amount of stamp duties. Tenants or landlords may pay for stamp duty depending on their agreement.
Can I Still Buy The Property If I Haven’t Paid Either BSD or ABSD?
Unfortunately, no. All buyers have to pay their BSD and any ABSD before purchasing the property. Doing otherwise is illegal and may incur infractions and other penalties from the HDB and regulating government entities. Foreigners who move into their purchased properties without paying for BSD and ABSD may become disqualified from buying them and temporarily suspended from purchasing new properties.
Can I Use CPF To Pay For Stamp Duty?
Only Singaporeans can pay their stamp duties using their CPF Ordinary Account. They must take note that only OA and not Special Accounts, Medisave, and Retirement Accounts cannot fulfill stamp duty payments.
Stamp duty applies to all buyers and sellers of Singaporean properties. With this short guide, you can confidently calculate your stamp duty based on your personal categorization according to Singapore’s regulations and budget for your desired property accordingly.
- Stamp duty applies to all property buyers and sellers in Singapore, including citizens, PRs, foreigners, and purchasing entities/real estate companies.
- Additional buyer’s stamp duties (ABSD) are applied on properties beyond S $180,000 in value.
- ABSD stamp duty for first-time Singaporean buyers is free. However, PRs still have to pay 5%
- Foreigners have to pay a standard 20% ABSD for any property they purchase
- Property-holding entities (PHEs) have to pay 25% ABSD for any property they purchase.
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